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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 13] NEW DELHI, FRIDAY, MAY 13, 1966/VAISAKHA 13, 1888

Separate paging is given to this Part in order that it may be filed

as a separate compilation.

MINISTRY OF LAW (Legislative Department) New Delhi, the 13th May, 1966/Vaisakha 23, 1888 (Saka,

The following Act of Parliament received the assent of the Pre- sident on the 13th May, 1966, and is hereby published for general information: —

THE FINANCE ACT, 1966

No. 13 OF 1966

[13th May, 1966]

An Act to give effect to the financial proposals of the Central

Government for the financial year 1966-67

BE it enacted by Parliament in the Seventeenth Year of the

Republic of India as follows: —

CHAPTER I

PRELIMINARY

Short title and com- mence- ment.

1. (1) This Act may be called the Finance Act. 1966. (2) Save as otherwise provided in this Act. sections 2 to 43, section 52 and section 53 shall be deemed to have come into force on the 1st day of April, 1966

(89)

CHAPTER II INCOME-TAX AND ANNUITY DEPOSITS FOR THE FINANCIAL YEAR 1966-67

Income- 2. (1) Subject to the provisions of sub-sections (2), (3), (4) and (5), t a x' for the assessment year commencing on the 1st day of April, 1966, income-tax shall be charged at the rates specified in Part I of the First Schedule and, in the cases to which Paragraphs A, B, C and D of that Part apply, shall be Increased by a surcharge for purposes of the Union and a special surcharge for purposes of the Union calculated in either case in the manner provided therein.

(2) In making any assessment for the assessment year commenc- ing on the 1st day of April, 1966, where the total income of an assessee, not being a company, includes any income chargeable under the head "Salaries", the income-tax payable by the assessee on that part of his total income which consists of such inclusion shall be an amount bearing to the total amount of income-tax payable according to the rates applicable under the operation of the Finance Act, 1965, 10 of on his total income the same proportion as the amount of such inclusion bears to his total income.

(3) In making any assessment for the assessment year commencing on the 1st day of April, 1966, where the total income of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, includes any profits and gains from life insurance business, the income-tax payable by it shall ' ° ¹⁹⁵⁶ be the aggregate of the income-tax calculated—

(i) on the amount of profits and gains from life insurance business, so included, at the rate applicable in the case of the Life Insurance Corporation of India, in accordance with Para- graph E of Part I of the First Schedule, to that part of its total income which consists of profits and gains from life insurance business; and

(ii) on the remaining part of its total income, at the rate applicable to the company on its total Income.

(4) In cases to which Chapter XII of the Income-tax Act, 1961 ^ Q( (hereinafter referred to as the Income-tax Act) applies, the tax chargeable shall be determined as provided in that Chapter, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter, as the case may be.

(5) (a) In respect of any assessment for the assessment year commencing on the 1st day of April, 1966, in the case of an assessee being a domestic company or an assessee other than a company,—

(i) where his total income includes any profits and gains derived from the export of any goods or merchandise out of India, he shall be entitled to a deduction, from the amount of income-tax with which he is chargeable, of an amount equal to

the income-tax calculated at one-tenth of the average rate of income-tax on the amount of such profits and gains included in his total income;

65 of 1951,

(Hi) where he is engaged in the manufacture of any articles in an industry specified In the First Schedule to the Industries (Development and Regulation) Act, 1951, and has, during the previous year, exported such articles out of India, he shall be entitled, in addition to the deduction of income-tax referred to in sub-clause (i), to a further deduction, from the amount #f income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on an amount equal to two per cent, of the sale proceeds receivable by him in respect of such export.

82 of 1962.

Explanation.—In this sub-clause, the expression "sale pro- ceeds" does not include freight or insurance attributable to the transport of the articles beyond the customs station as denned in the Customs Act, 1962;

(in) where he is engaged in the manufacture of any articles in an industry specified in the said First Schedule and has, during the previous year, sold such articles to any other person in India who himself has exported them out of India, and evidence is pro- duced before the Income-tax Officer of such articles having been so exported, the assessee shall be entitled to a deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on a sum equal to two per cent, of the sale proceeds receivable by him in respect of such articles from the exporter.

(b) The aggregate amount of the deductions under this sub-section shall in no case exceed the amount of income-tax otherwise payable by the assessee.

(c) Nothing contained in sub-clause (ii) or sub-clause (Hi) of clause (a) shall apply in relation to—

(1) fuels, (2) fertilisers, (3) photographic raw film and paper, (4) textiles (including those dyed, printed or otherwise pro- cessed) made wholly or in part of jute, including jute twine and rope,

(5) newsprint, (6) pulp—wood pulp, mechanical, chemical, including dissolving pulp,

(7) sugar, (8) vegetable oils and vanaspathi, (9) cement and gypsum products,

(11) cigarettes,

65 of 1951.

respectively, specified in items 2, 18, 20, 23(2), 24(2), 24(5), 25, 28, 35, 37 and 38 of the First Schedule to the Industries (Development and Regulation) Act. 1951.

(d) The amount of any profits and Rams derived from the export of any goods or merchandise out of India in respect of which deduc- tion of income-tax is admissible under sub-clause (i) of clause (o) shall be computed in accordance with the rules made by the Board in this behalf.

(6" In cases in which tax has to be deducted under sections 193 to 195 of the Income-tax Act at the rates in force, the deduction shall be made at the rates specified in P an U of the First Schedule.

(7) For the-purposes of this section and the First Schedule,—

(a) "company in which the public are substantially inter- ested" includes a subsidiary company of such company referred to in clause (b) of section 108 of the Income-tax Act;

(b) "domestic company" means an Indian company, or any other company which, in respect of its income liable to Income- tax under the Income-tax Act for the assessment year com- mencing on the 1st day of April, 1966, has made the prescribed arrangements for the declaration and payment within India of the dividends payable out of such income in accordance with the provisions of section 194 of that Act;

(c) "earned income" means any income of an assessee who is an individual, or a Hindu undivided family, or an unregis- tered firm Lnot being an unregistered firm assessed under clause (b) of section 183 of the Income-tax Act] pr an association of persons or body of individuals, whether incorporated or not, not being—

(A) a company, or (B) a local authority, or (C) a registered firm, or (D) an unregistered firm assessed under clause (b) of the said section 183—

(i) which is chargeable under the head "Salaries";

or

(ii) which is chargeable under the head "Profits and gains of business or profession" where the business or profession is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engaged in the conduct of the business or profession; or

(Hi) which is chargeable under the head "Income from other sources" if it is immediately derived from personal exertion or represents a pension or superannu- ation or other allowance given to the assessee in respect of the past services of any deceased person, or which

is chargeable under that head under clause (ia) of sub- section (2) of section 56 of the Income-tax Act, and

11 of 1922.

includes any such income which, though it is the income of an- other person, is included in the assessee's total income under the provisions of the Income-tax A':t, but does not include any such income on which income-tax is not payable under clause (in) or clause (v) of section 86 of that Act or which is exempted from tax under a notification issued under section 60 or section 60A of the Indian Income-tax Act, 1922, as continued in force by clause (I) of sub-section (2) of section 297 of the Income-tax Act;

(d) "industrial company" means a company which Is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.

Explanation.—For the purposes of this clause, a company shall be deemed to be mainly engaged in the business of genera- tion or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining, if the income attributable to any of the aforesaid activities included in its total income for the previous year is not less than fifty-one per cent, of such total income;

(e) "unearned income" means income which is not "earned income";

(j) "tax free security" means any security of the Central Government issued or declared to be income-tax free, or any security of a State Government issued income-tax free, the Income-tax whereon is payable by the State Government;

(q) all other words and expressions used in this section and the First Schedule but not denned in this sub-section and defined in the Income-tax Act, shall have the meanings respectively assigned to them in that Act.

Annuity deposit.

3. (1) Save as otherwise provided in Chapter XXIIA of the In- come-tax Act, annuity deposit for the assessment year commencing on the 1st day of April, 1966 and annuity deposit to be made during the financial year commencing on the lsrt day of April, 1966, shall be made by every person to whom the provisions of that Chapter apply, at the rate or rates specified in the Second Schedule.

(2) For the purposes of this section and the Second Schedule, the expressions "adjusted total income", "annuity deposit" and "deposi- tor" have the meanings respectively assigned to them under clauses (1), (5) and (6) of section 280B of the Income-tax Act.

CHAPTER III

AMENDMENTS TO THE INCOME-TAX ACT

4. In section 2 of the Income-tax Act,—

(a) in clause (IS),—

Amend- ment of section 2.

(i) In sub-clause ('fa), for the words "if it is not a private company", the words "if it is a company which is not a private company" shall be substituted;

(ii) in Explanation 2, for the words "consists wholly", the words "consists mainly in the construction of ships or" shall be substituted;

(b) in clause (22), in sub-clause (ia), after the words, figures and letters "the 31st day of March, 1964", the words, figures and letters "and before the 1st day of April, 1965" shall be inserted;

(c) in clause (42A), after the words "the date of its trans- fer", the following shall be inserted, namely: —

7 of 1947.

"but does not include a capital asset, being a certificate issued by an authorised dealer as denned in clause (ai) of section 2 of the Foreign Exchange Regulation Act, 1947, as evidence of the remittance of. foreign currency or other foreign exchange [as denned respectively in clause (c) and clause (d) of the said section] to India from a country out- side India in accordance with the provisions of the said Act and any rules made thereunder, during the period com- mencing on the 26th day of October, 1965 and ending on the 28th day of February, 1966, or such later date as the Cen- tral Government may, by notification in the Official Gazette, specify in this behalf, notwithstanding that such capital asset has been held by the assessee for not more than twelve months immediately preceding the date of its transfer".

5. In section 13 of the Income-tax Act, in clause (b), for sub- cluuse (ii), the following sub-clause shall be substituted, namely:~ Amend- ment of section 13

" (ii) if under the terms of the trust or the rules governing the institution, any part of such income enures, directly or in- directly, or if any part of such income or any property of the trust or the institution is during the previous year used or applied, directly or indirectly, for the benefit of the author of the trust or the founder of the institution or any person who has made a substantial contribution to such trust or institution "r any relative of such author, founder or person and where such author, founder or person is a Hindu undivided family, any part

such property is during the previous year used or applied, directly or indirectly, for the benefit of any member of the Hindu undivided family or any relative of any member of the family:

Provided that in a case where this section applies by reason only that under the terms of the trust or the rules governing the institution any part of such income enures directly or indirectly or that any part of the income or any property of the trust or institution is, during the previous year, used or applied directly or indirectly, for the benefit of any relative of such author, founder, person or member, and the amount of income so enuring or used or applied for the benefit of such relative, together with the value of the benefit derived by him from the user or application of such property, if any, during the previous year, does not exceed a sum calculated at the rate of twenty-five per cent of the income of the trust or institution of the previous year, the provisions of this section shall have effect only in respect of that part of the income of the .trust or institution which does not exceed the amount so enuring or used or applied together with the value of the benefit afore- said.".

6. Ixi section 32 of the Income-tax Act, in sub-section (1),—

(a) to clause (ii), the following proviso shall be added,

Amend- ment of section Si, namely: —

"Provided that where the actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is flxBt put to use by the assessee for the purposes of his busi- ness or profession;":

(b) m clause (Hi), for clause (1) of the Explanation, the following clause shall be substituted, namely: —

'(1) "moneys payable" in respect of any building, machinery, plant or furniture includes—

(a) any insurance, salvage or compensation moneys payable in respect thereof;

(b) where the building, machinery, plant or furni- ture is sold, the price for which it ia sold,

so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in

respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or com- pensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees Dears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso;';

(c) in clause (iuj, for. the Words "drawing a remuneration not exceeding two hundred rupees per mensem,", the words 'the income of each such person chargeable under the head "Salaries'' is seven thousand five hundred rupees Or less,' shall be substituted.

Amend- ment of section 43,

7. In section 33 of the Income-tax Act, in the Explanation to sub- section (3), the words "and the subsidiary company is an Indian company" shall be omitted.

8. Jn section 33A of the Income-tax Act,—•

Amend- ment 01 section 33A.

(a) in sub-section (1),—

(i) in clause (i),' 'for tihe winds' "forty per cent,", the words "fifty per cent." shall be substituted;

(ii) in clause (ii), for the words "twenty per cent.", the words "thirty per cent." shall be substituted;

(iii) for the words "be allowed as a deduction in res- pect of the third succeeding previous year next following the previous year in which the land Is prepared £or planting or replanting, as the case may be:", the following shall be substituted, namely: —

"be allowed as a deduction m the manner specified hereunder, namely:—-

(a) the amount of the development allowance shall, in the first instance, be computed with refer- ence to that portion of the actual cost of planting which is incurred during the previous year In which the land is prepared for planting or replanting, as the case may be, and in the previous year next fol- lowing, and the amount so computed shall be allow- ed as a deduction in respect of such previous year next following; and

(b) thereafter, the development allowance shall again be computed with reference to the actual cost of planting, and if the sum so computed exceeds the amount allowed as a deduction under clause (a), the amount of the excess shall be allowed as a deduction in respect of the third succeeding previous year next following the previous year in which the land has been prepared for planting or replanting, as the case may be:"-

(b) in sub-section (2),—

(i) for the words "the third succeeding previous year next following the previous year in which the land has been prepared", the words, brackets and figure "the previous year in respect of which the deduction is required to be allowed under sub-section (I)" shall be substituted;

(ii) for the words, brackets and figure "calculated at the rates specified in sub-section (2)", the words, brackets and figure "calculated at the rates and in the manner specified in sub-section (1)" shall be substituted.

•. In section 34 of the Income-tax Act, in clause (a) of sub-section ( 3 )-

Amend-

ment of

•ectlonM.

(i) after the proviso, the following proviso shall be inserted, namely: —

10. After section 35 of the Income-tax Act, the following section •hall be inserted, namely: —

Insertion ot new section 3SA.

Expen- diture on acquisition of patent rights or copyrights.

'35A. (1) In respect of any expenditure of a capital nature incurred after the 28th day of February, 1966, on the acquisition of patent rights or copyrights (hereafter, in this section, referred to as rights) used for the purposes of the business, there shall, subject to and in accordance with the provisions of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of tho amount of such expendi- ture.

Explanation.—For the purposes of this section,—

(i) "relevant previous years" means the fourteen pre- vious years beginning with the previous year in which such expenditure Is incurred or, where such expenditure Is in- curred before the commencement of the business, the four- teen previous years beginning with the previous yjear In which the business commenced:

Provided that where the rights commenced, that Is to say, became effective, in any year prior to the previous year in which expenditure on the acquisition thereof was incurred by the assessee, this clause shall have effect with the substi- tution for thie reference to fourteen years of a reference to fourteen yfears less the number of complete years which, when the rights are acquired by the assessee. have elapsed since the commencement thereof, and if fourteen years have elapsed as aforesaid, of a reference to one year;

(ii) "appropriate fraction" means the fraction the numerator of which is one and the denominator of which is the number of the relevant previous years.

(2) Where the rights come to an end without being subse- quently revived or where the whole or any part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) are not less than the cost of acquisition thereof remaining unallowed, no deduction under Kub-s-ection (1) shall be allowed in respect of the previous yc^r in which the rights come to an end or, as the case may be, the whole or any part of the rights is sold or in respect of any subsenuent previous year.

(3) Where the rights cither come to an end without being •ubsequently revived or are sold in their entirety and the pro- ceedi of the sale (so far as they consist of capital sums) are less than the cost of acquisition thereof remaining unallowed, a deduction equal to such cost remaining unallowed or, as the c"""

may be, such cost remaining unallowed as reduced by the pro- ceeds of the sale, shall be allowed in respect of the previous year in which the rights come to an end, or, as the case may be, "re sold.

(4) Where the whole or any part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) ex- ceed the amount of the cost of acquisition thereof remaining un- allowed, so much of the excess as does not exceed the difference between the cost of acquisition of the rights and the amount of such cost remaining unallowed shall be chargeable to income-tax as income of the business of the previous year in which the whole or any part of the rights is sold.

Explanation.—Where the whole or any part of the rights *s sold in a previous year in which the business is no longer in existence, the provisions .of this sub-section shall apply as tf the business is in existence in that previous year.

(5) Where a part of the rights is sold and sub-section (4) does not apply, the amount of the deduction to be allowed under sub-section (1) shall be arrived at by—

(a) subtracting the proceeds of the sale (so far as they consist of capital sums) from the amount of the cost of acquisition of the rights remaining unallowed; and

(b) dividing the remainder by the number of relevant previous years which have not expired at the beginning of the previous vear during which the riehts are sold.'.

Amend- ment of section 30.

11. In section 36 of the Income-tax Act, in sub-section (1), in clause (viii), for the wordy "an amount not exceeding ten per cent, of the total income carried to such reserve account:", the following shall be substituted, namely:—

"an amount not exceeding—

(a) in the case of a hnancial corporation whose paid-up share capital does not exceed three crores of rupees, twenty- five per cent.,

(b) in the case of any other financial corporation, ten per cent.,

of the total income carried to such reserve account:".

12. In section 43 of the Income-tax Act, to clause (1), the follow- ing proviso shall be added, namely:—

Amend- ment of section 43.

"Provided that where the actual cost of an asset, being a motor car acquired by the assessee after the 28th day of February, 1966, exceeds twenty-five thousand rupees, the ex-

th" actual cost thereof shall be taken to be twenty-five thousand rupees.".

13. In section 45 of the Income-tax Act, sub-sections (2), (3) and (4) shall be omitted.

Amend- ment of section, 43.

14. In section 55 of the Income-tax Act, in sub-section (2), clause (iv) shall be omitted.

Amend- ment of section 55,

15. In Chapter VIA of the Income-tax Act,—

(a) below the heading, the following sub-heading shall be

Amend- ment of Chapter VIA.

inserted, namely:—

"A.—Deductions in respect of certain payments";

(b) in section 80A, in sub-section (2) —

(i) in sub-clause (ii) of clause (a), for the word "; or" occurring at the end, the words "notwithstanding that such contract contains a provision for the exercise by the insured of an option to receive a cash payment in lieu of the pay- ment of the annuity; or" shall be substituted;

(ii) after clause (b), the following Explanation shall

be inserted, namely: —

"Explanation.—For the. purposes of sub-clauae (i)

of clause (a) and of clause (b) of this sub-section, an insurance on the life of any person referred to therein shall include—

(i) a policy of insurance on the life of such per- son securing the payment of a specified sum on the stipulated date of maturity of the policy, if such per- son is alive on such date, notwithstanding that the policy of insurance provides only for the return of premiums paid (with or without any interest there- on) in the event of such person dying before the said stipulated date;

(ii) a policy of insurance effected by a person for the benefit of a minor (being the assessee, or a male member of a Hindu undivided family where such family is the assessee) with the object of en- abling the minor, after he has attained majority, to secure an insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf;";

(c) after section 80D, the following sub-heading and section

shall be inserted, namely:—

"B.—Other deductions

Deduction! in respect of profits and gain* Irum specified industries in the case of certain companion.

80E. (1) In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of this Act) includes any profits \ and gains attributable to the business of generation or dis- • tribuuon of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent, thereof, in computing the total income of the company.

(2) This section applies to—

(a) an Indian company; or

(b) any other company which has made the prescrib- ed arrangements for the declaration and payment of dividends (.including dividends on preference shares) within India,

but does not apply to any Indian company referred to in clause (a), or to any other company referred to in clause (b), if such Indian or other company is a company referred to in section 108 and its total income as computed before applying the provisions of sub-section (1) does not exceed twenty-five thousand rupees.".

16. In section 85A of the Income-tax Act,— Amend-

(a) in the proviso,—

ment of section 8SA.

(i) the words "wholly or" shall be omitted;

7 Of ISM.

(it) for the words, figures and brackets "the list in para- graph 2 of the Third Schedule to the Companies (Prollts) Surtax Act, 1964", the words "the list in the Fifth Schedule" shall be substituted;

7-"f 1M4.

(b) in the Explanation, for tha words, figures and brackets "the list In paragraph 2 of the Third Schedule to the Companies (Profits) Surtax Act, 1964", the words "the list in the Fifth Schedule" shall be substituted.

17. After section 85A of the Income-tax Act, the following sections

shall be inserted, namely:—

Insertion of new sectlong 85B and

DeductlOQ of tax on divi- dends received from certain foreign companies.

"85B. Where shares in a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India (hereafter, in this section, referred to as the foreign company) have been allotted to an assessee, being an Indian company, in consideration of any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to the foreign company by the assessee, or in consideration of technical services render- ed or agreed to be rendered to the foreign company by the assessee, under an agreement approved by the Central Govern- ment in this behalf before the 1st day of October of the relevant assessment year, and any income by way of dividend on buch shares is included in the total income of the assessee, the assessee shall be entitled to a deduction from the income-tax with which it is chargeable on its total income for the assessment year of so much of the amount of income-tax calculated at the average rate of income-tax on the income by way of dividend so included as exceeds the amount of twenty-nve per cent, thereof.

Deduction of tax on royalties, etc., recelv ed from certain foreign companies.

85C. Where the total income of an assessee, being an Indian company, includes any income by way of royalty, commission, fees or any similar payment received by it from a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India (hereinafter, in this section, reterred to as the foreign company) in consideration for the use oi any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to the foreign company by the assessee, or jn consideration of technical services rendered or agreed to be rendered to the foreign company by the assessee, under an agreement approved by the Central Government in this behalf before the 1st day of October of the relevant assessment year, the assessee shall be entitled to a deduction from the income-tax with which it ii chargeable on its total income for the assessment year of so much of the amount of income-tax calculated at the average rate of income-tax on the income so included ag exceeds the amount of

18. In section 86A of the Income-tax Act, for the words "twenty- five", the words "twenty-seven and a half" shall be substituted.

Amend- ment of section 86A.

19. In section 88 of the Income-tax Act, in clause (a) of sub-section Amend- ment of section 88.

(1), for the words "twenty-flve", the words "twenty-seven and a half" shall be substituted.

20. In section 104 of the Income-tax Act,—

Amend- ment o* section 104.

(a) In sub-section (1),—

(i) for the words, brackets and figure—

"on the distributable income as reduced by—

({) the amount of dividends actually distributed, and", the words "on the distributable income as reduced by the amount of dividends actually distributed, if any." shall be substituted;

(ii) clause (ii) shall be omitted;

(b) in sub-section (4),~

(i) in clause (a), for the words "wholly or mainly", the words "mainly in the construction of ships or" shall be substituted;

(ii) after clause (b), the following clause shall be, and shall be deemed always to have been, inserted, namely:—

" (c) a company which is neither an Indian com- pany nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India.";

(iii) in the Explanation, after the words ''consist mainly in", the words "the construction of ships or in" shall be inserted.

21. In section 109 of the Income-tax Act,—

Amend- ment of section 109 (a) in clause (i), after sub-clause (f), the following sub- clauses shall be inserted, namely:—

'(g) any expenditure actually incurred for the purposes of the business, but not deducted in computing the income chargeable under the head "Profits and ?ains of business or profession" being—

(1) • bonui or gratuity paid to "J employ*,

(2) legal charges,

(3) any such expenditure as is referred to In clause (c) of section 40;

(4) any expenditure claimed as a revenue expendi- ture but not allowed to be deducted as such and not resulting in the creation of an asset or enhancement In the value of an existing asset;

(h) any expenditure wholly and exclusively incurred for the purpose of making or earning any Income (other than Income chargeable under the head "Profits and gains of busi- ness or profession") included In the total income but not allowed to be deducted in computing such income and not resulting in the creation of an asset or enhancement In the value of an existing asset;';

(b) for clause (U), the following clause shall be substituted, namely: —

'(ii) "investment company" means a company whose total Income consists mainly of income which, If it had been the income of an Individual, would have been regarded as unearned income.

Explanation.—In this clause, the expression "unearned Income" has the meaning assigned to it in the Finance Act of the relevant year;';

(c) in clause (iia), the words "wholly or" shall be omitted;

(d) in claus© (Hi),—

(i) in sub-clause (1), after the words "an investment company", the words "other than an investment company which falls under sub-clause (3) of this clause" shall be In- serted;

(ii) for sub-clause (3), the following sub-clause shall be substituted, namely:—

"(3) in the case of an Indian company [not being an Indian company which falls under the provisions of cltuae (a) of sub-section (4) of section 104], a part only of who**

total income consists of profits and gains attributable to th" business of construction of ships or Of manufacture or pro- cessing of goods or of mining or of generation or distribution of electricity or any other form of power—

(a) In relation to the profits and Rains Nil:

attributable to such business

(b) in relation to the remaining part of its

total income—

(1) If it is an Investment company or a company which satisfies the con- ditions specified in sub-clause (4) (a) of this clause 90%;

(2) in any other caae 60%

Explanation.—The provisions of this Chapter shall, in relation to the remaining part of the total Income aforesaid, apply as if such part were the total Income of the company; and, for the purposes of section 104. the amount of dividends actually distributed shall he deemed to be such proportion thereof as the part aforesaid bears to the total income of the company."

Amend-

ment of

section

112J"

22. In section 112A of the Income-tax Act, the existing tixvlana- Uon shall be re-numbered as Explanation 1 and after KxwlavaUon 1 as so re-numbered, the following Explanation shall he Inserted, namely: —

'Explanation 2.—For the purposes of this section and section* 112, 114 and 193, "National Savings Certificates (First Issue}" Includes "National Savings Certificates (First Issue)—Ban* Series"

23. In section 114 of the Income-tax Act, in sub-clause (ii) of clause (b), the third proviso shall be omitted.

Amend-

ment Of

unction 114.

24. In section 115 of the Income-tax Act,—

Ampnci- ment of •ipction IIS (a) clause (i) shall be omitted;

(b) In aub-clause (b) of clause (U), the brackets, words and figure "[excluding capital gains, if any, referred to in clabse (i) J* shall be omitted:

(c) in clause ({it), for the words, braclfpts and figures "in clauses (i) ahd (ft)", the words, brackets and figures "in clause (tt)" shall be (substituted.

2K. In section 193 of the Income-tax Act, In the proviso, after clause Amend- ment of section 103. (iii), the following clause shall be inserted, namely;—

"(hi) any Interest payable on any nther security of the Central or State Government, where the security Is held by an individual, not being a non-resident, and the holder thereof makeg a declaration In writing before the person responsible for paying the' Interest that—

Ja) he h11 of ¹⁹²²

(b) his total income of the previous year in which the interest Is due Is not likely to exceed the maximum amount not chargeable to tax; and

(c) the total nominal value of the securities held bv him (Including such securities, if anv, as are held on his behalf by any other person) did not exceed two thousand five hun- dred rupees at any time during the said previous year.".

M. Tn section 201 of the Income-tax Act,—

Amend-

ment of

section 201.

(a) In sub-section (1), In the proviso, for the word "wllfullv". the words "without good and sufficient reasons" shall be substi- tuted;

(h) after sub-section (1). the following sub-section shall be Inserted, namely: —

"(1A) Without preiudicp to the provisions nf sub-section (I), if any such person, principal officer or company as Is referred to In that sub-section does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pav simple interest at six per cent, per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax Is actually paid.";

(c) in sub-section (2), for the words "It shall be a charge", the words, brackets, figure and letter "the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge" shall be substituted.

Amend-

ment of

•ectiou 233.

27. In section 235 of the Income-tax Act, In sub-clauses (i) and (ii) of clause (b), for the words "twenty-five", the words "twenty, seven and a half" shall be substituted.

28. In section 23tiA of tne Income-tax Act,—

Amend- ment at section 23&A.

(a) in sub-section (I), for the words, figures and letters "the 1st day of April, iy64", the words, figures and letters "the 1st day ol April, 1966" shall be substituted;

(b) for sub-section (2), the following sub-section shall be substituted, namely;—

" (2) The amount to be given as credit under sub-section (1) shall be a sum which bears to the amount of the tax payable by the company under the provisions of the annual Finance Act with reference to the relevant amount of dis- tributions of dividends by it the same proportion as the amount of the dividends (other than dividends on preference shares) received by the institution or fund from the company bears to the total amount of dividends (other than dividends on preference shares) declared ur distributed by the com- pany during the previous year.

Explanation.—in sub-section (2) of this section and in section 28QZB, the expression "the relevant amount of dis- tributions of dividends" has the meaning assigned to it in the Finance Act of the relevant year.".

29. In section 280C of the Income-tax Act, for sub-section (2), the following sub-section shall be substituted, namely; —

Amend- ment of section 280C.

" (2) In respect of the adjusted total income in relation to which an annuity deposit is to be made under sub-section (1), such deposit shall—

(1) in respect of the adjusted total income of the previ- ous year or previous years relevant to the assessment year commencing on the 1st day of April, 1966, or any earlier assessment year, be made in advance in accordance with the provisions of sections 280E to 2801;

(ii) in respect of the adjusted total income of the pre- vious year or previous years relevant to the assessment year commencing on the 1st day of April, 1967, or any subsequent assessment year, be made by such person at any time (in one sum or in instalments of his choice) during the financial year immediately preceding such assessment year at the rate or rates specified in this behalf in the annual Finance Act:

Provided that the Income-tax Officer may, in such casei,

may be specified in a scheme framed under section 280W( allow a depositor to m a ke a deposit or a further deposit at any time after the expiry of the financial year referred to in clause (ii), and any deposit or further deposit so made shall be deemed to be an annuity deposit for the relevant assess- ment year for the purposes of this Chapter.".

30. For sections 280O and 280P of the Income-tax Act, the follow- ing sections shall be substituted, namely: —

Substi- tution of new sec- tions for sections ;:B0O and 280P.

Annuity deposit allowed as deduc- tion in

computing

total income.

'280O. (1) Notwithstanding anything to the contrary con- tained in the provisions, of this Act relating to the computation of income chargeable under any head of income, the annuity deposit required to be made under this Chapter shall, subject to the provisions of sub-section (2), be allowed as a deduction in computing the total income assessable for the assessment year in respect of which the annuity deposit is required to be made:

Provided that where in relation to the assessment year com- mencing on the 1st day of April, 1967 or any subsequent assess- ment year, no annuity deposit has been made during the finan- cial year Immediately preceding such assessment year [or such lurlher period as may be allowed by the Income-tax Officer under the proviso to clause (ii) of sub-section (2) of section 280C], or the amount of annuity deposit made during the finan- cial year or further period aforesaid falls short of the annuity deposit required to be made under this Chapter, the amount to be allowed as a deduction under this sub-section shall be nil or, as the case may be, limited to the amount of the deposit so made, and the provisions of this section shall have effect as if references therein to the annuity deposit required to be made were references to the amount of annuity deposit actually so made.

(2) If the adjusted total income of the depositor Includes 8ny income chargeable under the head "Salaries", the allowance i^n4er sub-section (1) shall be made in computing the income under that head, and if there is no income chargeable under that head or the annuity deposit required to be made exceeds such income, the whole or the balance of the annuity deposit required to be made shall be allowed as a deduction in comput- ing earned income chargeable under any other head, and if there is no earned income chargeable under any other head or the whple or the balance of the annuity deposit required to be

of the annuity deposit required to be made shall be allowed aa a deduction in computing any other income under any head.

Explanation.—In this sub-section, the expression "earned income" has the meaning assigned to it in the Finance Act of the relevant year.

280P. Any person responsible for paying any income charge- able under, the head "Salaries" to a resident may, at the time of payment, deduct income-tax under section 192 as if the ei.u- mated income referred to in sub-section (2) of that section had been reduced by the amount of annuity deposit, if any, required to be made by the assessee in respect of such income, whether such annuity deposit has or has not been made:

Annuity deposit deductible in compu- ting in- Lome under the nead "Salaries" lor pur- poses of section 192.

Provided that nothing contained in this section shall apply in the case of a person whose estimated income aforesaid does not exceed twenty-five thousand rupees unless such person has, not later than the 31st day of December of the financial year, made a declaration, in writing, before the person responsible for paying the income chargeable under the head "Salaries", of his intention to make the annuity deposit under the provisions of this Chapter and specifying the amount which he so intends to deposit; and where such declaration has been made, the provi- sions of this section shall apply as if the reference therein to the amount of annuity deposit required to toe made were a re- ference to the amount specified in such declaration.'.

31. For section 280X of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April. 1967. name- lv: —

Substi- tution of new sec- tion for section 280X.

Liability to pay additional income- tax in certain cases.

'280X. (1) Where in relation to the assessment year com- mencing on the 1st day of April, 1967 or any subsequent assess- ment year, a depositor does not make any annuity deposit dur- ing the financial year immediately preceding such assessment year or such further period as may be allowed by the Income-tax Officer under the proviso to clause (ii) of sub-section (2) of section 280C, or the amount of annuity deposit made by him during the financial year or further period aforesaid falls short of the annuity deposit required to be made (which short-fall is hereafter, in this section, referred to as deficiency), he shall, in addition to the income-tax payable by him for that assessment year, be liable to a further amount of income-tax calculated in

manner sDecifled in sub-section (2):

Provided that nothing contained in this section shall apply in a case where—

(a) such depositor is more than seventy years of age on the last day of the previous year relevant to the assessment year; or

(b) the total income of such depositor of the previ- ous year relevant to the assessment year (the total in- come for this purpose being computed without making any allowance under section 280O) does not exceed twenty-five thousand rupees.

(2) The further amount of income-tax referred to in sub- section (2) shall be—

(i) in a case where the depositor does not make any annuity deposit, a sum equal to fifty per cent, of the amount by which the amount of annuity deposit required to be made in respect of that assessment year exceeds the difference between—

(a) the tax payable by him on his total income, and

(b) the tax that would have been payable had his total income been reduced by the amount of annuity de- posit required to be made;

(li) in a case where the amount of annuity deposit made by him falls short of the annuity deposit required to be made, a sum equal to fifty per cent, of the amount by which the amount of the deficiency exceeds the difference between—

(a) the tax payable by him on his total income, and

(b) the tax that would have been payable had his total income been reduced by the amount of the de- ficiency.

Eoqplanation.—In this section, the expression "annuity deposit required to be made" shall mean—

({) the amount of annuity deposit calculated on the adjusted total income of the depositor at the rate or rates specified in the Finance Act of the relevant year, or

(il) the amount by which the total income of the deposi- tor for the relevant assessment year (such total income being computed without making any allowance under section 280O) exceeds twenty-five thousand rupees,

32. The amendments directed in the Third Schedule shall be made in the Income-tax Act.

Conse-

quential

or minor

amend-

ments

relating

to annuity

deposits

In the

Income-

tax Act.

Amend*

ment of

section

280 ZB.

33. In section 280ZB of the Income-tax Act, in Explanation 2, for the sentence beginning with the words "The amount of income-tax payable by the company" and ending with the words "during the previous year or any previous year prior to that year.", the following shall be substituted, namely: —

"The amount of income-tax payable by the company for any assessment year shall be computed after making allowance for any relief, rebate or deduction in respect of Income-tax to which the company is entitled under the provisions of this Act or the annual Finance Act and after deducting from such amount of income-tax—

(a) the amount of additional income-tax, if any, payable by the company under the provisions of section 104; and

10 of IMS.

(b) (i) in respect of the assessment year commencing on the 1st day of April, 1965, the amount, if any, by which the rebate of income-tax admissible to the company under the provisions of the Finance Act, 1965, is, under the provisions of the said Act, reduced with reference to the face value of any bonus shares or the amount of any bonus issued by the company to its shareholders during the previous year or any previous year prior to that year or with reference to any amount of dividends declared or distributed by it during the previous year or any previous year prior to that year; or

(it) in respect of the assessment year commencing on the 1st day of April, 1966, or any subsequent assessment year, the amount of income-tax, if any, payable by the company under the provisions of the annual Finance Act with reference to the relevant amount of distributions of dividends by it.".

34. After section 288 of the Income-tax Act, the following sec- tions shall be inserted, namely: —

Insertion

of new

sections

288A and

288B.

Rounding

off of

Income.

'288A. (1) Subject to the provisions of sub-section (2), the amount of total income computed in accordance with the fore- going provisions of this Act shall be rounded off to the nearest

multiple of ten rupees and for this purpose any part of a rupee consisting of poise shall be Ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount Is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure Is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten; and the amount so rounded off shall be deemed to be the total income of the assessee for the purposes of this Act.

(2) If the total Income of the assessee includes earned In- come chargeable under any head, the adjustment under sub- section (1) shall, to the extent possible, be made in computing such earned income and, as to the balance, if any, against any other Income; and If there Is no earned income, the adjustment shall be made In computing any other income under any head.

Explanation.—In this section, the expression "earned In- come" has the meaning assigned to it in the Finance Act of the relevant year.

Rounding off of tax, etc.

288B. The amount of tax (Including tax deductible at source or payable In advance), interest, penalty, fine or any other sum payable, and the amount of refund due, under the provisions of this Act shall be rounded oft" to the nearest rupee and, for this purpose, where such amount contains a part of a rupee con- sisting of paise, then, if such part is fifty palse or more, it shall be increased to one rupee and if such part Is less than fifty paise, it shall be ignored.'.

Amend- ment of section 297.

35. In section 297 of the Income-tax Act, in clause (!) of sub- section (2), after the word and figures "section 60", the words, figures and letter "or section fiOA" shall be. and shall be deemed always to have been, Inserted.

Amend- ment of First Schedule.

36. In the First Schedule to the Income-tax Act, in rule 3, in clause (e), for the words "twenty-five", the words "twenty-seven and a half" shall be substituted.

37. (1) In the Fifth Schedule to the Income-tax Act —

Amend- ment of Fifth Schedule.

(a) for the brackets, words, figures and letter "\See section 33(1) (Hi) (c)]", the following shall be substituted, namely:—

"[See sections 33(1) (tit) (c), 80E and 8&A]";

(b) in item (16), after the word "pulp", the words "including newsprint" shall be inserted;

(c) after item (25), the following items shall be inserted, namely:-—

"(26) Tea.

(27) Printing machinery.".

(2) For the purposes o£ sub-section (1) of section 33 of the said Act, the amendments made by clauses (b) and (c) shall have effect in respect of machinery or plant installed after the 31st day of March, 1966.

CHAPTER IV

OTHEH DIRECT TAXES

38. In the Estate Duty Act, 1953,— Amend-

(a) in section 9, in sub-section (1), for the words "one year"

ment of Act 34 of 1953.

the words "two years" shall be substituted;

(b) in section 10, in the proviso, for the words "one year", the words "two years" shall be substituted;

(c) in section 11, in sub-section (2), for the words "one year", wherever they occur, the words "two years" shall be substituted;

(d) in section 12, in the proviso to sub-section (1), for the words "one year", the words "two years" shall be substituted;

(c) in section 22, for the words "one year", the words "two years" shall be substituted;

(f) in section 33, In sub-section (1),—

(i) in clause (b), for the words "one year" the words "two years" shall be substituted;

(ii) after clause (m), the following clause shall be, and shall be deemed to have been, inserted with effect from the 1st day of April, 1965, namely: —

"(mm) property belonging to the deceased who was a member of any police force (including a border secu- rity force) and was killed in any action in protecting the border;";

(g) in section 34, in clause (a) of sub-section (1), after the brackets and letter "(m)" the brackets and letters "(mm)" shall be, and shall be deemed to have been, inserted with effect from the 1st day of April, 1965;

(h) in section 46, in sub-section (2), for the words "one year", the words "two years" shall be substituted;

(!) in the Second Schedule, for Part 1. the following Part shall

be substituted, namely: —

'PART I

In the case of any property which passes or is deemed to pass on

the death of the deceased—

(1)

Nil;

(2)

(3)

where the principal value of the estate does not exceed Rs, SO,000 where the principal value of the estate exceeds Rs. 5U,0'K) but does not exceed Rs. 1,00,000 where the principal value of the estate exceeds Rs. 1,00,000 but does not exceed Rs. 2,00,000

(4) where the principal value of the estate exceeds Rs. :>,()'),000 but does not exceed Rs. 3,50,000

(5) where the principal value of the estate exceeds Rs, 3,50,000 but does not exceed Rs, 3,00,000

(6) where the principal value of the estate exceeds Rs. 0,00,000 but Aor.i n ot e x c e ed R s. 10,OH >M>[t

(7) where the principal value of the estate exceeds RH. 10,U(),'j00 but does not exceed Rs. 15,00,000

(8) where the principal value of the estate exceeds Rs, 15,00,000 but does not exceed Rs. 20,00,000

(9) where the principal value of tho estate exceeds Rs, . 20,00,000

Transi- tional jro- visions.

4 per cent, of the amount by which the principal value of the estate exceeds Rs. 50,000;

Rs. 2,000 plus 10 per cent, of the amount by whicn the principal value of the estate exceeds Rs. 1,00,000;

Rs. 12,000 plus 15 per cent, of the amount by which the principal value of the estate exceeds Rs. 2,00,000;

Rs. 34,500 plus 25 per cent, of the amount by which the principal value of the estate exceeds Rs. 3,50,000;

Rs. 72,000 plus 30 per cent, of the amount by which the principal value of the estate exceeds Rs. 5,00,000;

Rs. 2,22,000 plus 40 per cent, of the amount by which the principal value of the estate exceeds Rs. 10,00,000;

Rs. 4,22,000 plus 60 per cent, of the amount by which the prin- cipal value of the estate exceeds Rs. 15,00,000;

Rs. 6,72,000 plus 85 per cent, of the amount by which the prin- cipal value of the estate exceeds Rg. 20,00,000.".

34 of 1953.

39. in the case of persona dying on or after the 1st day of April, 1966, but before the 1st day of April, 1967, sections 9, 10, 11, 12, 22, 33 and 46 of the Estate Duty Act, 1953, as amended, respectively, by clauses (a), (6), (c), (d) and (e), sub-clause (i) of clause (/) and clause (h) of section 38, shall have effect as if references therein to the two years before the death of the deceased were references to the said two years less so much thereof as fell before the 1st day of April, 1965.

40- The Expenditure-tax Act, 1957 is hereby repealed.

41. In the Gift-tax Act, 1958,—

(a) in section 5,—

Repeal of Act 29 of 1957 Amend- ment of Act IB of 1958.

(I) in sub-section (I), after clause (ii), the following

clause shall be inserted, namely: —

'(iia) being an individual who is not resident in India, to any person resident in India, of foreign cur- rency or other foreign exchange [as defined, respectively

7 of 1947.

in clause (c) and clause (d) of section 2 of the Foreign Exchange Regulation Act, 1947] remitted from a country outside India in accordance with the provisions of the said Act, and any rules made thereunder, during the period commencing on the 26th day of October, 1965 and ending on the 28th day of February, 196fi, or such later date as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Explanation.—For the purposes of this clause, the expression "resident in India" shall have the meaning assigned to it in the Income-tax Act;';

(ii) in sub-section (2), for the words "five thousand", the

words "ten thousand" shall be substituted;

(b) section 6A shall be omitted;

(c) for the Schedule, the following Schedule shall be substi-

tuted, namely: —

"THE SCHEDULE

[See section 3]

RATES OF GIFT-TAX

(1)

5 per cent, of the value of such Where the value of all taxable gifts does not exceed Rs. 15,000

(2)

gifts.

Where the value of all taxable gifts exceeds Rs. 15,000 but does not exceed Rs, 40.000

(a)

Rs. 750 plus 8 per cent, of the amount by which (he value of such gifts exceeds Rs. 15,000.

Where the valu^ of nil taxable gifts exceeds Rs. 40,000 but does not exceed Rs. 90,000

'4)

Rs. 2,750 plus 10 per cent, of the amount by which the value of sufh gifts exceeds Rs. 40,000.

Where the value of all taxable gifts exceeds Rs. 90,000 but does not exceed Rs. 1,40,000

(5)

Rs. 7,730 plus 15 per cent, of the amount by which the value of such Rifts exceeds Rs. 90,000.

Where the value ("if RII taxable gifts exceeds Rs. 1,40,000 but does not exceed Rs. 1,90,000

(6)

Rs. 13,230 plus 17-3 per cent of the amount by which the vnlue of such gifts exceeds Rs. 1,40,000.

Rs. 24,000 plus 20 per cent, of the amount by which the vulue of such gifts exceeds Rs. 1,90,000.

Where the value of all taxable gifts exceeds Rs. 1,90 000 but docs not exceed Rs. 3,40,000.

(7)

Rs. 54,000 plus 28 per cent, of the amount by which the value of such gifts exceeds Rs 3,40,000.

Where tho value of all taxable gifts exceeds Rs. 3,40,000 but does not exceed Rs. 4,90,000.

<8)

Rs. 91,500 plus 30 per cent, of the nmnunt by which the value of such (jlfts exceeds Rs. 4,90,000.

Where the value of all taxable gift exceeds Rs. 4,90,000 but does not exceed Rs. 9,90,000

'9) Where the value of all taxnbit> gifts exceeds Rs, 9,90,000 but does not exceed Rs. 14,90,000

Where the value of all taxable [10)

gifts exceeds Rs. 14, 90, 000.

Rs. 2,41,500 pins 40 per cent of the amount bv which the value of such gifts exceeds Rs. 9,90,000 Rs. 4,41i500 plus 50 per cent, of the amounL by which the va^if of pi'eh gifts exceeds

42. The Super Profits Tax Act, 1963 is hereby repealed.

Repeal of Aft 14 of 1963.

43. In the Companies (Profits) Surtax Act, 1964,—

(a) in the First Schedule, in clause (i) of rule 2,—

Amend-

ment of

Act 7 of

1964.

(i) for sub-clause (b), the following sub-clause shall be substituted, namely: —

'(b) the amount of income-tax, if any, payable by the company under the provisions of the annual Finance Act with reference to the relevant amount of distribu- tions of dividends by it.

Eocplanation.—In this sub-clause, the expression "the relevant amount of distributions of dividends" has the meaning assigned to it in the Finance Act of the relevant year;';

(ii) after sub-clause (b), the following suo-clause shalJ be, and shall be deemed always to have been, inserted, namely: —

"(c) the amount of income-tax, if any, payable bji the company under section 104 of the Income-tax Act.

Exvlanation.—In relation to the assessment year commencing on the 1st day of April, 1964, the reference in this sub-clause to "income-tax" shall be construed at. a reference to "super-tax";';

(b) in the Third Schedule,—

(i) in Paragraph 1,—

(1) for the figures and words "40 per cent.", the figures and words "35 per cent." shall be substituted;

(2) the first and second provisos shall be omitted,

(3) in the third proviso,—

(A) for the words "Provided further", the word "Provided" shall be substituted:

(B) in clause (a), the words "after deducting from such amount of income-tax the amount, if any, by which the rebate of income-tax admissible to the company under the provisions of the annual Finance Act is, under the provisions of the said Act, reduced with reference to the face value of any bonus shares or of

to its shareholders during the previous year or any previous year prior to that year" shall be omitted;

(ii) Paragraph 2 shall be omitted.

CHAPTER V

INDIRECT TAXES

Special duties of customs.

32 of 1934.

44. (I) In the case of goods chargeable with a duty of customs which is specified in the First Schedule to the Indian Tariff Act, 1934 (hereinafter referred to as the Tariff. Act), or in that Schedule as amended by a subsequent Central Act, if any, or in that Schedule read with any notification of the Central Government for the time being in force, there shall be levied and collected as an addition to, and in the same manner as, the total amount so chargeable, a special duty of customs equal to 10 per cent, of such amount:

Provided that In computing the total amount so chargeable, any duty chargeable under section 2A of the Tariff Act or section 45 of thid Act shall not be included.

10 of 1897

(2) Sub-section (1) shall cease to have effect after the 31st day of May, 1967 except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then bi/en repealed by a Central Act.

Regulatory duties of customs.

45. (1) With a view to regulating or bringing greater economy in imports, there shall be levied and collected, with effect from such date, and at such rate, as may be specified in this behalf by the Central Government by notification in the Official Gazette, on all or any of the goods mentioned in the First Schedule to the TanlT Act or in that Schedule as amended by a subsequent Central Act, if any, a regulatory duty of customs not exceeding—

(a) 25 per cent, of the rate, if any, specified in the said First Schedule read with any notification issued under section 3A or sub-section (1) of section 4 of the Tariff Act; or

(b) 10 per cent, of the value of the goods as determined in accordance with the provisions of section 14 of the Customs Act, 52 of 1962.

1962,

whichever is higher:

Provided that different dates and different rates may be specified by the Central Government for different kinds of goods.

(2) Sub-section (1) shall cease to have effect after the 15th day

to be

10 of 1897.

before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

52 of 1962.

(3) The regulatory duty of customs leviable under this section in respect of any goods referred to in sub-section (1) shall be In ad- dition to any other duty of customs chargeable on such goods under the Customs Act, 1962.

52 of 1962.

(4) The provisions of the Customs Act, 1962 and the rules and re- gulations made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collection of the regulatory duty of customs leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of customs on such goods under that Act or those rules and regulations.

(5) Every notification issued under sub-section (I) shall, as soon as may be after it is issued, be placed before each House of Parliament.

46. In the Indian Tariff (Amendment) Act, 1949, in sections 4 and 5, for the figures "1966", the figures "1967" shall be substituted.

47. In the Central Excises and Salt Act, 1944 (hereinafter referred to as the Central Excises Act), in the First Schedule,—

Amend- ment of Aft 1 of IH4!>. Amend- ment of Act I of 1944.

(a) in Item No. 1, for the entries in the third column against sub-items (I) and (2), the entries "Thirty rupees and fifty paise per quintal." and "Fifteen rupees per quintal." shall, respective- ly, be substituted;

(b) in Item No. 4,—

(1) under "I. Unmanufactured tobacco—", for the entries in the third column against sub-items (1), (2) and (4), the entries "Three rupees and twenty paise.", "Twenty-five rupees." and "Two rupees and sixty paise." shall, respective- ly, be substituted;

(2) under "II. Manufactured tobacco—", for the entries in the third column against sub-items (1)(1), (1) (itj), (1) (Hi) and (1) (iv), the entries "Twenty rupees.", "Twelve rupees.", "Four rupees." and "One rupee." shall, respectively, be substituted; l

(c) in Item No. 9, for the entry in the third column, the entry "One hundred and ninety-five rupees per metric tonne."

(d) after Item No. 14D, the following Item shall be inserted, namely:—

Fifteen per cent, ad valorem."- "14DD. SYNTHETIC ORGANIC PRO- DUCTS OF A KIND USED AS ORGANIC LUMINOPHORES; PRODUCTS OF THE KIND KNOWN AS OPTICAL BLEACHING AGENTS, SUBSTANTIVE TO THE FIBRE.

(e) in Item No. 14H, for the entry in the third column against sub-item (iv), the entry "One rupee per kilogram." shall be substituted;

(f) after Item No. I5A, the following Item shall be inserted, namely: —

"15AA. ORGANIC SURFACE-ACTIVE Ten per cent. ad valorem.";

AGENTS (OTHER THAN SOAP); SURFACE- ACTIVE PREPARATIONS AND WASHING PREPARATIONS, WHETHER OR NOT CON- TAINING SOAP.

(g) in Item No. 18, for the entry in the third column, the entry "Twelve rupees per kilogram." shall be substituted;

(h) in Item No. 18A, for the entries in the third column against sub-items (1) and (2), the entries "One rupee and (ifty paise per kilogram." and "Sixty paise per kilogram." shall, respectively, be substituted ;

(i) in Item No. 19—

(1) for the entry in the third column against each of the sub-items (1), (2) and (5), the entry "Eighty paise per square metre." shall be substituted;

(2) for the entry in the third column against each of the sub-items (3) and (4), the entry "Sixty paise per square metre." shall be substituted ;

(j) in Item No. 26AA —

(1) the word "flats" occurring in the entry in the second column against sub-item (ia) shall be omitted;

(2) for the words "Skelp and strips" occurring in the entry in the second column against sub-item (iu), the words "Flats, skelp and strips." shall be substituted;

(3) for the entry in the third column against sub-item {iV), the entry "Fifteen per cent, ad valorem plus the excise duty for the time being leviable on pig iron or steel ingots, as the case may be." shall be substituted;

(k) in Item No. 33B,—

(1) for the entry in the second column against sub- item (i), the following entry shall be substituted, namely:—

"Insulated wires and cables of copper, aluminium or other metals and alloys, whether sheathed or un- sheathed, the conductor of any core of which, not being one specially designed as a pilot core, has a sectional area not exceeding 1-5 square millimetres in the case of copper, or not exceeding 2 • & square millimetres in the case of aluminium or of not more than equivalent con- ductivity as of copper in the case of other metals and alloys.";

(2) the following Eocplanation shall be inserted at the end, namely:—

'Explanation.—The expression "Electric wires and cables, all sorts" used in this Item shall not include square or rectangular conductors, whether insulated or not.'.

Special duties of excise on certain goods.

48. (1) When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act (as amended by this Act or any subsequent Central Act) read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected—

(a) as respects goods comprised in Items Nos. 6, 8, 9, 14D, 22A, 23A except sub-item (1) thereof, 23B, 28, 29, sub-items (2) and (3) of Item No. 31 and Item No. 32 of the First Schedule to the Central Excises Act, a special duty of excise equal to 10 per cent, of the total amount so chargeable on such goods;

(b) as respects goods comprised in Items Nos. 2, 3(1), sub- items I, II (2) and II (3) of Item No. 4, Items Nos. 13, 14, 14F, 15, 15A, 15B, 16, 16A, 17, 18A(2), 21, 22, 23, 23A(1), 27, 30, 31(1), 33, sub-items (1), (3a) and (4) of Item No. 34 and Item No. 37 of that Schedule, a special duty of excise equal to 20 per cent, of the total amount so chargeable on such goods; and

(c) as respects goods comprised in Items Nos. 4 11(1), 18, 18A(1), 18B, 20, 29A, 33A, sub-items (2) and (3) of Item No. 34

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 121

and radiograms comprised in Item No. 37A of that Schedule, a special duty of excise equal to 33$ per cent, of the total amount so chargeable on such goods.

10 of 1897.

(2) Sub-section (1) shall cease to have effect after the 31st day of May, 1967, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been re- pealed by a Central Act.

(3) The duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable en such goods under the Central Excises Act or any other law for the time being in force and such special duties shall be Ijevied for purposes of the Union and the proceeds thereof shall not be distributed among the States.

(4) The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and col- lection of the duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules.

ReEulntory duties of excise.

49. (1) With a view to regulating or bringing greater economy in consumption, there shall be levied and collected, with effect from such date, and at such rate, as may be specified in this behalf by the Central Government by notification in the Official Gazette, on all or any of the goods mentioned in the First Schedule to the Central Excises Act as amended by this Act or any subsequent Central Act, a regulatory duty of excise which shall not exceed 15 per cent, of the value of the goods as determined in accordance with the pro- visions of section 4 of the Central Excises Act:

Provided that different dates and different rates may be specified by the Central Government for different kinds of goods.

10 of 1897

(2) Sub-section (1) shall cease to have effect after the 15th day of July, 1967, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The duties of excise referred to in sub-section (1) In respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excises Act or

122 THE GAZElTE OF INDIA EXTRAORDINARY [PART 11

shall be levied for purposes of the Union and the proceeds thereof shall not be distributed among the States.

(4) The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collec- tion of the regulatory duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and col- lection of the duties of excise on such goods under that Act or those rules.

(5) Every notification issued under sub-section (1) shall, as soon as may be after it is Issued, be placed before each House of Parliament.

Disconti- nuance ot •alt duty.

50. For the year beginning on the 1st day of April, 1966, no duty under thie Central Excises Act, or the Tariff Act shall be levied in res- pect of salt manufactured in, or imported into, India.

CHAPTER VI

MISCELLANEOUS

51. (1) In the Central Sales Tax Act, 1956 —

Amend- ment of act 74 of L968.

(a) in section 8, in sub-section (1) and in sub-section (2A), for the words "two per cent.", wherever they occur, the words "three per cent." shall be substituted;

(b) in section 15, in clause (a), for the words "two per cent.", the words "three per cent." shall be substituted.

(2) The amendments by sub-section (1) made in the Central Sales Tax Act, 1956 shall take effect on and from the 1st day of July, 1966.

Amend- ment of Act 63 of I960.

52. In section 4A of the Preference Shares (Regulation of Divi- dends) Act, 1960, for the words "such deduction shall in no case ex- deed twenty-five per cent, of the stipulated dividend.", the following words, figures, letters and brackets shall be substituted, namely: —

"such deduction made by the company from any dividend declared after the 28th day of February, 1966 shall in no case exceed twenty-seven and a half per cent, of the aggregate of—

(i) the stipulated dividend, and

(li) an amount equal to eleven per cent, of the stipulated

53- In section 32 of the Unit Trust of India Act, 1963— Amend- ment of Act 52 of 1963.

(a) in sub-rection (1), for clause (b) and the Explanation, the following clause and Explanation shall be substituted, name- l y :-

43 of 1961.

(b) where in the case of a unit-holder, being an indivi- dual, the income in respect of units received by him from the Trust during the previous year does not exceed one thousand rupees, such income, and where such income ex- ceeds one thousand rupees, a sum of one thousand rupees, shall not be included in computing his total income of that vear under the Income-tax Act, 1961.

Explanation.—In this clause, "previous year" has the 43 of 1961.

same meaning as in the Income-tax Act, 1961;';

(b) in sub-section (2), for clause (c), the following clause shall be substituted, namely: —

"(c) where in the case of a unit-holder, being an indi- vidual who is not resident in India, the income in respect of units receivable by him from the Trust during the financial year—

(i) does not exceed one thousand rupees, no deduc- tion of income-tax chall be made by the Trust from the Income distributed to him;

(ii) exceeds one thousand rupees, deduction of in- come-tax shall be made by the Trust from the whole of the income distributed to him at the rate of fifteen per cent, of such income.".

THE FIRST SCHEDULE

(See section 2)

PART I

income-tax and surcharges on income-tax

Paragraph A

In the case of every individual or Hindu undivided family or un- registered firm or other association of persons or body of individuals,

whether incorporated or not, or every artificial juridical person refer- red to In sub-clause (vii) of clause (31) of section 2 of the Income- tax Act, not being a case to which any other Paragraph of this Part applies.—

Rates of income-tax

(1) where the total income <1oes not exceed Rs. 5,000

'2) where the total Income exceeds Rs. 5.000 but does not exceed Ra. 10.000

m where the total Income exceeds Rs lO.OOn but does not exceed Ra. 15,000

where the total income exceeds Rs. 15,000 but docs not exceed Ra. 20,000

where thp total income exceeds Ra. 20,000 but does not exceed Rs. 25,000

(8) where the total Income exceeds Ra. 25,000 but does not exceed Rs. 30,000

(7) where the total income exceeds Rs. 30.000 but does not exceed Rs. 50,000

(8) where the total income exceeds Rs. 50,000 but does not exceed Rs. 70,000

(9) where the total income (.tceeds Rs. 70.000

5 per cent, of the total income;

Rs. 250 phis 10 per cent, of the amount by which the total income exceeds Rs. 5,000;

Rs. 750 plus 15 per cent, of thp amount by which thf total income exceeds Rs. 10,000;

Rs. 1,600 plus 20 per cent, of the amount bv which thp total income exceeds Rs. 15,000;

Rs, 2,500 plus 30 per cent, of the amount bv which the total income exceeds Rs. 20,000;

Rs. 4,000 plus 40 per cent, of the amount by which the total in- come exceeds Rs, 25,000;

Rs. 6,000 plus 50 per cent, of the amount by which thp total income exceeds Rs. 30,000;

Rs. 16,000 plus 60 per cent, of the amount by which the total income exceeds Rs. 50,000;

Rs. 28,000 PIUR 65 per cent, of the amount by which the total income exceeds Rs. 70,000 :

Provided that for the purposes of this Paragraph, in the case of a

person, not being a non-resident—

(i) no income-tax shall be payable on a total income not

exceeding the following limit, namely: —

(a) Rs, 7,000 in the case of every Hindu undivided family which as at the end of the previous year satisfies either of the following two conditions, namely: —

(1) that it has at least two members entitled to

claim partition who are not less than eighteen years o age; or

(2) that it has at least two members entitled to claim partition who are not lineally descended one from the other and who are not lineally descended from any other living member of the family;

(b) Rs. 4,000 in every other case;

(ii) where such person is an individual or a Hindu undivid- ed family, the income-tax computed at the rate hereinbefore specified shall be reduced by so much of the amount specified hereunder, as does not exceed the amount of income-tax so com- puted:—

in the case of an unman led (a) Rs. 125

Individual;

Rs. 200

(b)

In the case of a married individual who has no child mainly depen- dent on him or a Hindu undivided family which has no minor coparcener;

Rs. 220

(c)

in the case of a married individual who has one child malruV dependent on him or a Hindu undivided family which has on*, minor coparcener mainly sup- ported from the income of such family;

(d) Rs, 240

in the case of a married Individual who has more than one child mainly dependent on him or a Hindu undivided family which has more than one minor coparcener mainly supported from the income 01 such family;

(Hi) where the total income is twenty thousand rupees or less, the income-tax payable shall not exceed forty per cent, of the amount by which the total income exceeds the limit specifi- ed in sub-clause (a) or, as the case may be, sub-clause (b) of clause (i) of this proviso.

Surcharges on income-tax

The amount of income-tax computed in accordance with the pre-

ceding provisions of this Paragraph shall be increased by the aggre- gate of surcharges for purposes of the Union calculated as specified

hereunder: —

(a) where—

52 of 1963.

(i) In the case of an individual or a Hindu undivided family, the amount of unearned Income, not being income by way of interest on any security of the Central or State Gov- ernment or income received in respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included in the total income, or

(ii) in any other case, the amount oi unearned Income included in the total income,

exceeds Rs. 15,000,

a surcharge calculated on the difference between the amount of income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the amount of income-tax computed in respect of an income of Rs. 15,000 if it had been the total income, at the following rate, namelv: —

20 per cent, of the amount of (1)

such difference;

(2)

Rs. 2,900 plus 25 per cent, of the amount by which the difference aforesaid exceeds Rs. 14.500:

where the amount of the difference does not exceed Rs. 14,500 where the amount of the difference exceeds Rs. 14,500 (b) where—

52 of 1903.

(i) in the case of an Individual or a Hindu undivided family, the earned income and Income by way of interest on any security of the Central or State Government and income received In respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included in the total Income, err

(ii) in any other case, the earned Income included In the total income,

exceeds Rs. 1 lakh,

a surcharge calculated on the amount of the difference between the income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total Income and the income-tax computed In respect of a total income of Rs. 1 lakh, at the following rate, namely: —

(1)

3 per cent, of the amount of Jiich

difference;

where the amount of the difference does not exceed Rs. 63,000

(2)

Rs. 3,250 vlus 10 per cent, of the amount by which the difference aforesaid exceeds Rs. 63,000;

where tho amount of the difference excDens Rs. 65,000 but does not exceed Rs. 1,30,000

SEC 11 THE GAZETTE Of INDIA EXTRAORDINARY 127

(3) where the amouni of Rs. 9,750 plus 15 per cent, of th" the difference exceeds amount by which the dill'erence Rs. 1,30,000 aforesaid exceeds Rs. 1,30,000;

and

(c) a special surcharge calculated at the rate of ten per

cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed in accordance

with the preceding provisions of this Paragraph; and

(ii) the aggregate of the amounts of the surcharges calculated in accordance with clause (a) and clause (b) of this sub-paragraph.

Paragraph B

In the case of every co-operative society,—

Rates of income-tax

(1) where the total Income does not exceed Rs. 5,000

(2)

(3)

(4)

(6)

(6)

where the total Income exceeds Rs. 5,000 taut does not exceed Rs. 10,000 where the total income exceeds Rs. 10,000 but does not exceed Ra. 15.000 where the total Income exceeds Rs 15,000 but does not exceed Rs. 20,000 where the total income exceeds Rs. 20,000 but does not exceed Rs. 25,000 where the total income exceeds Rs, 25,000

Provided that—

5 per cent. 01 the total income;

Rs. 250 plus 10 per cent. 01 the amounft by which the total income exceeds Rs. 5,000;

Rs. 750 plus IB per cent, of the amount by which the total income exceeds Rs. 10,000;

Rs. 1,300 plus 20 per cent, of the amount by which the total Income exceeds Rs. 15,000;

Rs. 2,500 plus 25 per cent, of the amount by which the total income exceeds Rs. 20,000;

Rs. 3,750 plus 41 per cent, of the amount by whicn the total income exceeds Rs. 25,000:

(i) no income-tax shall be payable on a total income not

exceeding Rs. 4,000; and

{ii) where the total income is twenty thousand rupees or less, the income-tax payable shall not exceed forty per cent, of the amount by which the total income exceeds Rs. 4,000.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder: —

(o) where the total income exceeds Rs. 25,000, a surcharge calculated at the rate of 61 per cent, of the amount of the differ- ence between the income-tax computed at the rates hereinbefore specified and the income-tax computed in respect of a total in- come of Rs. 25,000; and

1 2g THE GAZETTE OF INDIA EXTRAORDINARY [PART II

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph.

Paragraph C

In the case of every registered firm,—

Rates of income-tax

Nil;

(1) where the total income does not exceed Rs. 25,000

(2) where the total Income exceeds Rs. 25,000 but does not exceed Rs. 50,000

(3) where the total income exceeds Rs. 50,000 but does net exceed Rs. 1,00,000

(4) where the total income exceeds KB. 1,00,000

0 per cent, of the amount by which the total income exceeds Rs. 25,000;

Ra. 1,500 plus 8 per cent, of the amount by which the total income exceeds Rs. 60,000;

Rs, 6,500 plus 12 per cent, of the amount by which the total income exceeds Rs, 1,00,000.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder: —

(a) in the case of a registered firm whose total income In- cludes Income derived from a profession carried on by it and the income so Included Is not less than fifty-one per cent, of such total Income, a surcharge calculated at the rate of ten per cent, of the amount of income-tax computed at the rate hereinbefore specified;

(b) in the case of any other registered firm, a surcharge calculated at the rate of twenty per cent, of the amount of income-tax computed at the rate hereinbefore specified; and

(c) a special surcharge calculated at the rate of ten per rent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a), or, as the case may be, clause (b) of this sub-paragraph.

Paragraph D

In the case of every local authority,—

Rate of income-tax

On the whole of the total income 45 per cent

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder:—

(a) a surcharge calculated at the rite of ten par cent of the amount of income-tax computed at the rate hereinbefore speci- fied; and

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph.

Paragraph E

In the case of the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956,—

31 of 1956.

Rates of income-tax

52-5 per cant;

on that part of Its total income which consists of profits and gains from life insurance business

(ii) on the balance, if any, of the total income

the rate of income-tax applicable, in accordance with Paragraph F of this Part, to the total income of a domestic company which i> a company in which the public are substantially interested.

Paragraph F

In the case of a company, other than the Life Insurance Corpora- tion of India established under the Life Insurance Corporation Act, 1956,—

31 of 19B8.

Rates of income-tax

I. In the case of a domestic company—

(A) (1) where the company is a company hi which the public are substantially interested,—

({) in a case where the 45 per cent, of the total income,

total Income does not excetd Rs. 20,000

(ii) In a case where the total income exceeds Rs. 25,000

(2) where the company is not a company in which the public are substantially Interested,—

(i) in the case of an in- dustrial company—

(1) on so much of the total income as doea not exceed Rs. 10,00,000 (2) on the balance, if any, of the total income

(li) in any other case

(B) in addition, where the com- pany is—

(1) a company in which the public are substantially interested, or

(ii) • company as is referred to In clause (iit) of sub- section (2) or clause (•) or clause (b) of sub- MCtlon (4) of section 104 of the Income-tax Act, or

(ill) such a company as is exempt from the opera- tion of section 104 of the said Act by a notification issued under the provi- sions of sub-section (3) of that section,

on so much of the total in- come as does not oxceed the relevant amount of distribu- tions of dividends by the company

55 per cent, of the total income;

55 per cent.;

60 per cent.;

65 per cent, of the total income;

and

1.5 per cent.:

Provided that the income-tax payable by a domestic company,

being A company in which the public are substantially interested, the

total income of which exceeds Rs. 25,000, shall not exceed the aggre-

gate of—

(a) the income-tax which would have been payable by the

company if its total income had been Rs. 25,000 (the income of

Rs. 25,000 for this purpose being computed as If such income

included income from various sources in the same proportion as

the total income of the company); and

(b) 80 per cent- of the amount by which its total Income

•xce*djt Re. 26,000.

(Explanation 1.—In clause (B), the expression "the relevant amount of distributions of dividends" means the aggregate of the following amounts, namely: —

3 of 1964.

10 of 1965.

(a) the amount of dividends, other than dividends on pre- ference shares, declared or distributed by the company during the previous year relevant to the assessment year commencing on the 1st day of April, 1964, or the 1st day of April, 1965, with reference to which the amount of the rebate arrived at under the first proviso to Paragraph D of Part II of the First Schedule to the Finance Act. 1964 or. as the case may be, the first proviso to Paragraph F of Part I of the First Schedule to the Finance Act, 1965 is required to be reduced under the second proviso to the said Paragraph D or, as the case may be, the second proviso to the said Paragraph F, as diminished by BO much of the amount of dividends aforesaid with reference to which the rebate referred to hereraabove is reduced under the "econd proviso to the said Paragraph D or the second proviso to the said Para- graph F; and

(b) so much of the amount of the dividends, other than dividends on preference shares, declared or distributed by the company during the previous year as exceeds ten per cent, of its paid-up equity share capital as on the 1st day of the previous year.

Explanation 2.—For the purposes of clause (B), where a part of the Income of a company is not included in its total Income because it is agricultural income, the amount declared or distributed as dividends (other than dividends on preference shares) shall be deemed to be such proportion thereof as the sum specified In clause (a) bears to the sum specified In clause (b), such sums being—

(a) the average amount of the total Income of the company of the five previous years in which it has been in receipt of tax- able Income immediately preceding the relevant previous year; and

(b) the average amount of the total profits and gains (ex- cluding capital receipts) of the company of the five previous years referred to in clause (a) reduced by such allowances at may be admissible under the Income-tax Act but which have not been taken into account by the company in Its profit and loss accounts for the said five previous years-

Explanation 3.—For the removal of doubts, It is hereby declared that where any dividends were declared by the company before the commencement of the previous year and are distributed by It during

that year, the amount of such dividends shall not be included in the •mount of dividends referred to in clause (b) of Explanation 1.

II. In the case of a company other than a domestic company: —

(I) on so much of the total income as consists of—

(a) royalties received from an Indian concern in pur- suance of an agreement made by it with the Indian concern after the 31st day of March, 1981, or

(b) fees for rendering tech- nical services received from an Indian concern in pursuance of an agree- ment made by it with the Indian concern after the 29th day of February, 1964,

and where such agreement has, ir"50 per cent; either case, been approved by the Central Government (H) on the balance, If any, of the 70 per cent,

total income

PART II

Rates for deduction of tax at source in certain cases

In every case In which under the provisions of sections 193 to 195 of the Income-tax Act, tax is to be deducted at the rates In force, deduction shall be made from the Income subject to deduction, at the following rates:—

Incaqd e-tax

Rate of

surcharge

Kate of

income-tax

1. In the case of a person other than

4 per cent.;

18 par cent.

a company— (a) where the person is resident, on the whole income (excluding interest payable on a tax free security)

(b) where the person is not real-

income-tax at 25 per cent, and surcharge at 8 per cent, of the amount of the income

dent In India— (i) on the whole income (ex- cluding interest payable on a tax free security)

or

income-tax and surcharges on in- come-tax in respect of the in- come at the rates prescribed in Paragraph A of Part I of this Schedule, if such income had been the total income,

whichever Is higher;

12-5 per cent. 4 per cent

({{) on the income by way of interert payable on a tax free security

Income-tax

Rate of surcharge

Rate of Income-tax

2. In the case of a company—

Nil

22 per cent

(a) where the company is a do- mestic company, on the whole income (excluding interest pay- able on a tax free security)

(b) where the company Is not a

domestic company—

Nil

15 per cent.

(i) on the income by way of dividends payable by an In- dian company as is referred to in the proviso to section 85A of the Income-tax Act

Nil

25 pter cent.

(H) on the Income by way of dividends payable by any domestic company other than a company referred to in (i) hereinabove

90 per cent.

mi

(Wl) on the Income by way of royalties payable by an In- dian concern in pursuance of an agreement made by ft with the Indian eomcern after the 31st day of March, 1981, and which has been approved by the Central Government

50 per cent

mi

(iv) on the Income by way of fees payable by an Indian concern for rendering tech- nical services in pursuance of an agreement made by it with the Indian concern after the 29th day of Febru- ary, 1964, and which has been approved by the Cen- tral Government

Nil

44 per cent.

(v) on the income by way of Interest payable on a tax free security

70 per cent.

(vi) on any other income

w

THE SECOND SCHEDULE

(See section 3)

Rates of annuity deposits

({) In the case of any depositor Nil.

whose total income does not ex- ceed Rs. 15,000

(ii) In the case of any depositor 5 per cent, of the adjusted whose total income exceeds total income: Rs. 15,000 but does not exceed Rs. 20,000

Provided that the annuity deposit to be made shall in no case exceed half the amount by which the total income exceeds Rs. 15,000.

(iii) In the case of a depositor whose 7J per cent, of the adjusted total income exceeds Rs. 20.000 total income:

but does not exceed Rs. 40,000

Provided that the annuity deposit to be made shall in no case exceed the aggregate of the following sums, namely: —

(a) an amount calculated at five per cent, on so much of the adjusted total income as does not exceed Rs. 20,000;

(b) one-half of the amount by which the total income ex- ceeds Rs. 20,000.

(iv) In the case of a depositor whose 10 per cent, of the adjusted total income exceeds Rs. 40,000 total income: but does not exceed Rs. 70,000

Provided that the annuity deposit to be made shall in no case exceed the aggregate of the following sums, namely: —

(a) an amount calculated at seven and a half per cent, on so much of the adjusted total income as does not exceed Rs. 40,000;

(b) one-half of the amount by which the total income ex- ceeds Rs. 40,000.

(t?) In the case of a depositor whose 12* per cent, of the adjusted total income exceeds Rs. 70,000 total income:

Provided that the annuity deposit to be made shall in no case exceed the aggregate of the following sums, namely: —

(a) an amount calculated at ten per cent, on so much of the adjusted total income as does not exceed Rs. 70,000;

(b) one-half of the amount by which the total income ex- ceeds Rs. 70,000.

Explanation.—In this Schedule, "total income" means total in- come computed in the manner laid down in the Income-tax Act with- out making any allowance under section 280O of that Act.

THE THIRD SCHEDULE

(See section 32)

FURTHER AMENDMENTS IN THE INCOME-TAX ACT

Section 156.—Omit "(including annuity deposit referred to in Chapter XXIIA)" with effect from the 1st day of April, 1967.

Section 246.—In clause (o),—

(a) in sub-clause {v), omit "or";

(b) omit sub-clause (vi),

with effect from the 1st day of April, 1967.

Section 280E.—Re-number the existing Explanation as Explana- tion 1, and after Explanation 1 as so re-numbered, insert—

"Explanation 2.—The provisions of this section and of sec- tions 280F to 2801 shall not apply in respect of the financial year commencing on the 1st day of April, 1966 or any subsequent financial year.".

Omit sections 280J, 280K, 280R and 280T with effect from the 1st day of April, 1967.

Section 280M.~~For sub-section (2), substitute with effect from the 1st day of April, 1967—

" (2) Where any depositor has deposited any amount for any assessment year which he is not liable to depo- sit under the provisions of this Chapter or which is in excess of the amount required to be deposited under the said provisions for that year, then, the entire amount or excess amount, as the case may be, may be refunded, adjusted or otherwise dealt with in such manner and having regard to such factors as may be specified in a scheme framed under section 280W.".

For section 280Q, substitute—

Rounding off.

"280Q. The amount of any deposit to be made under this Chapter shall be rounded off to the nearest multiple of ten rupees and for this purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten.".

Section 280W.—After clause (a) of sub-section (2), insert—

"(aa) the cases in which, the circumstances under which and the conditions subject to which, the Income-tax Officer may, under the proviso to clause (ii) of sub-section (2) of section 280C, allow a depositor to make a deposit or a further deposit after the expiry of the financial year immediately preceding the assessment year;".

S. P. SEN-VABMA, Secy, to the Govt, of India.

PBINTED IN INDIA BY THE GENERAL MANAaER, GOVERNMENT OF INDIA PRESd, MINTO ROAD, NEW DELHI AND PUBLISHED BY THE MANAGER OF PUBLICATIONS,