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

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

Short title

and com-

mence-

ment.

(89)

9^o

THE GAZETTE OF INDIA EXTRAORDINARY

[PART

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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

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.

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,

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

(11) cigarettes,

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.

65 of 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 Pan 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;

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

(D) an unregistered firm assessed under clause (b) of

the said section 183—

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

(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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

11 of 1922.

is chargeable under that head under clause (ia) of sub-

section (2) of section 56 of the Income-tax Act, and

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.

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.

Annuity

deposit.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART U

CHAPTER III

AMENDMENTS TO THE INCOME-TAX ACT

Amend-

ment of

section 2.

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

(a) in clause (IS),—

(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;

fer", the following shall be inserted, namely: —

"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".

7 of 1947.

Amend-

ment of

section 13

5. In section 13 of the Income-tax Act, in clause (b), for sub-

cluuse (ii), the following sub-clause shall be substituted, namely:~

" (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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

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

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

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,

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

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

Amend-

ment of

section Si,

THE GAZETTE OF INDIA EXTRAORDINARY

[PABT II

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;';

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.

Amend-

ment 01

section

33A.

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

(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

fcc 1]

THE GAZETTE OF INDIA EXTRAORDINARY

(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

year in respect of which the deduction is required to

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)-

(i) after the proviso, the following proviso shall be inserted,

namely: —

'Provided further that where a ship has been acquired

after the 28th day of February, 1966, this clause shall have

effect in respect of such ship as¹ if for the words "seventy-

five", the word "fifty" had been substituted.¹;

(ii) the following Explanation shall be, and shall be deem-

ed always to have been, inserted, namely: —

"Eocplanation.—For the removal of doubts, it Is hereby

declared that the deduction referred to in section 33 shall

not be denied by reason only that the amount debited to

the profit and loss account of the relevant previous year and

credited to the reserve account aforesaid exceeds the amount

of the profit of such previous year (as arrived at without

making the debit aforesaid) in accordance with thp profit

and loss account",

Amend-

ment of

•ectlonM.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

Insertion

ot new

section

3SA.

10. After section 35 of the Income-tax Act, the following section

•hall be inserted, namely: —

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

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«»»

&XC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

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

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.'.

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:".

Amend-

ment of

section 30.

12. In section 43 of the Income-tax Act, to clause (1), the follow-

ing proviso shall be added, namely:—

"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-

Amend-

ment of

section 43.

100

THE GAZETTE OF INDIA EXTRAORDINARY

[PABT H

th« actual cost thereof shall be taken to be twenty-five thousand

rupees.".

Amend-

ment of

section, 43.

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

(4) shall be omitted.

Amend-

ment of

section 55,

14. In section 55 of the Income-tax Act, in sub-section (2),

clause (iv) shall be omitted.

Amend-

ment of

Chapter

VIA.

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

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

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;";

SlC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

lot

shall be inserted, namely:—

"B.—Other deductions

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.".

Deduction!

in respect

of profits

and gain*

Irum

specified

industries

in the case

of certain

companion.

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

Amend-

ment of

section

8SA.

7 Of ISM.

(a) in the proviso,—

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

(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

102

THE GAZETTE OS¹ INDIA EfclttAORDINAJlY

[PAST H

DeductlOQ

of tax

on divi-

dends

received

from

certain

foreign

companies.

"85B. Where shares in a company which is neither

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

SEC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

103

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

(1), for the words "twenty-flve", the words "twenty-seven and a

half" shall be substituted.

Amend-

ment of

section 88.

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

(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.

Amend-

ment o*

section 104.

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

(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*,

Amend-

ment of

section 109

104

THE GAZETTE OF INDIA EXTRAORDINARY

[PART H

(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;';

(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**

SEC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

!0J

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."

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"

Amend-

ment of

section

112J»

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,—

(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:

clauses (i) ahd (ft)", the words, brackets and figures "in clause

(tt)" shall be (substituted.

Ampnci-

ment of

•ipction IIS

106

THE GAZETTE OF INDIA EXTRAORDINARY

[PAHT II

Amend-

ment of

section 103.

2K. In section 193 of the Income-tax Act, In the proviso, after clause

(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 h<is not previously been assessed under this Act

or tinder the Indian Income-tax Act, 1922;

11 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.".

Amend-

ment of

section 201.

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

(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.";

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.

Sic 1]

THE GAZETTE OF INDIA EXTRAORDINARY

^ 7

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

(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.".

Amend-

ment at

section

23&A.

29. In section 280C of the Income-tax Act, for sub-section (2), the

following sub-section shall be substituted, namely; —

" (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,

Amend-

ment of

section

280C.

»6S

THE GAZETTE OF INDIA EK^AORTflNAHY

[PAH* n

may be specified in a scheme framed under section 280W(

allow a depositor to make 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.".

Substi-

tution of

new sec-

tions for

sections

;:B0O and

280P.

30. For sections 280O and 280P of the Income-tax Act, the follow-

ing sections shall be substituted, namely: —

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

Ska 1]

THE GAZETTE OF INDIA EXTRAORDINARY

1&9

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:

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.'.

Annuity

deposit

deductible

in compu-

ting in-

Lome

under the

nead

"Salaries"

lor pur-

poses of

section

192.

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.

'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):

Liability

to pay

additional

income-

tax in

certain

cases.

llo

THE GAZETTE OF INDIA EXTRAORDINARY

{PJAT 11

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,

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINABY

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.

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

Amend*

ment of

section

280 ZB.

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: —

'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

Insertion

of new

sections

288A and

288B.

Rounding

off of

Income.

Ii2

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

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.

Amend-

ment of

Fifth

Schedule.

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

(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]";

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

113

(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-

ment

of Act 34

of 1953.

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

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;

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;

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;

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

(!) 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)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

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

where the principal value of the

estate exceeds

Rs.

:>,()'),000 but

does not exceed Rs. 3,50,000

where the principal value of the

estate exceeds Rs, 3,50,000 but does

not exceed Rs, 3,00,000

where the principal value of the

estate exceeds

Rs. 0,00,000 but

Aor.i not exceed Rs. 10,OH >M>[t

where the principal value of the

estate exceeds

RH. 10,U(),'j00 but

does not exceed Rs. 15,00,000

where the principal value

of the

estate exceeds

Rs, 15,00,000 but

does not exceed Rs. 20,00,000

where the principal value of tho

estate exceeds Rs, . 20,00,000

Nil;

4 per cent,

of the

amount

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

the

estate

exceeds

Rs. 2,00,000;

Rs. 34,500 plus 25 per cent, of the

amount by which the

principal

value

the

estate

exceeds

Rs. 3,50,000;

Rs. 72,000 plus 30 per cent, of the

amount by which the

principal

value

the

estate

exceeds

Rs. 5,00,000;

Rs. 2,22,000 plus 40 per cent, of the

amount by which the

principal

value

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.".

Transi-

tional jro-

visions.

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.

34 of 1953.

Repeal of

Act 29 of

1957

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

Amend-

ment of

Act IB of

1958.

41. In the Gift-tax Act, 1958,—

(a) in section 5,—

(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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

115

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;

tuted, namely: —

"THE SCHEDULE

[See section 3]

RATES OF GIFT-TAX

(1)

(2)

(a)

'4)

(5)

(6)

(7)

<8)

'9)

[10)

Where the value of all taxable

gifts does not exceed Rs. 15,000

Where the value

of all taxable

gifts exceeds Rs. 15,000 but does

not exceed Rs, 40.000

Where the valu^

of nil taxable

gifts exceeds Rs. 40,000 but does

not exceed Rs. 90,000

Where the value of all taxable

gifts exceeds Rs. 90,000 but does

not exceed Rs. 1,40,000

Where the value ("if RII taxable

gifts exceeds Rs. 1,40,000 but does

not exceed Rs. 1,90,000

Where the value of

all taxable

gifts exceeds Rs. 1,90 000 but docs

not exceed Rs. 3,40,000.

Where tho value of all

taxable

gifts exceeds Rs. 3,40,000 but does

not exceed Rs. 4,90,000.

Where the value of all taxable

gift exceeds Rs. 4,90,000 but does

not exceed Rs. 9,90,000

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

gifts exceeds Rs. 14, 90, 000.

5 per cent, of the value of such

gifts.

Rs. 750 plus 8 per cent, of the

amount by which (he value of

such gifts exceeds Rs. 15,000.

Rs. 2,750 plus 10 per cent, of the

amount by which the value of

sufh gifts exceeds Rs. 40,000.

Rs. 7,730 plus 15 per cent, of the

amount by which the value of

such Rifts exceeds Rs. 90,000.

Rs. 13,230 plus 17-3 per cent of

the amount by which the vnlue

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.

Rs. 54,000 plus 28 per cent, of the

amount by which the value of

such gifts exceeds Rs 3,40,000.

Rs. 91,500 plus 30 per cent, of the

nmnunt by which the value of

such (jlfts exceeds Rs. 4,90,000.

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

pi'eh

gifts

exceeds

Il6

THE GAZETTE OF INDIA EXTRAOHDINARY

[PAHT II

Repeal of

Aft 14 of

1963.

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

Amend-

ment of

Act 7 of

1964.

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

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

(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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

117

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

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.

Special

duties of

customs.

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.

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

Regulatory

duties of

customs.

52 of 1962.

(b) 10 per cent, of the value of the goods as determined in

accordance with the provisions of section 14 of the Customs Act,

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

: ⁸

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

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.

10 of 1897.

(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.

52 of 1962.

Amend-

ment of

Aft 1 of

IH4!>.

46. In the Indian Tariff (Amendment) Act, 1949, in sections 4 and

5, for the figures "1966", the figures "1967" shall be substituted.

Amend-

ment of

Act I of

1944.

47. In the Central Excises and Salt Act, 1944 (hereinafter referred

to as the Central Excises Act), in the First Schedule,—

(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

the

entry "One hundred and ninety-five rupees per metric tonne."

SEC. 1J

THE GAZETTE OF INDIA EXTRAORDINARY

li$

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

namely:—

"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.

Fifteen

per cent,

valorem."-

(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

AGENTS (OTHER THAN SOAP); SURFACE-

ACTIVE PREPARATIONS AND WASHING

PREPARATIONS, WHETHER OR NOT CON-

TAINING SOAP.

Ten per

cent.

advalorem.";

(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;

120

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II

(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

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

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.

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.

ReEulntory

duties of

excise.

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

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

Amend-

ment of

act 74 of

L968.

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

(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

SEC, 1]

THE GAZETTE OF INDIA EXTRAORDINARY

123

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.

43 of 1961.

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

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,

124

T ™ GAZETTE OF INDIA EXTRAORDINARY

[PART II

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)

'2)

(8)

(7)

(8)

(9)

where the total income <1oes not

exceed Rs. 5,000

where the

total

Income exceeds

Rs. 5.000 but

does not

exceed

Ra. 10.000

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

where the total Income exceeds

Ra. 25,000 but does not exceed

Rs. 30,000

where the total

income exceeds

Rs. 30.000 but

does not exceed

Rs. 50,000

where the total income exceeds

Rs. 50,000 but

does not exceed

Rs. 70,000

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

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

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

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

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

125

(2) that it has at least two members

entitled

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:—

(a)

(b)

(c)

(d)

Rs. 125

Rs. 200

Rs. 220

Rs, 240

in the case of

an unman led

Individual;

In the case of a married individual

who has no child mainly depen-

dent

him

Hindu

undivided family which has no

minor coparcener;

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;

in the case of a married Individual

who has more than one

child

mainly dependent

on him or a

Hindu undivided

family which

has

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

X26

THE GAZETTE OF INDIA EXTRAORDINARY

[PART H

hereunder: —

(a) where—

(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

52 of 1963.

(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: —

(1)

(2)

where the amount of the

difference does not exceed

Rs. 14,500

where

the

amount of

the

difference

exceeds

Rs. 14,500

20 per cent, of the amount of

such difference;

Rs. 2,900 plus 25 per cent, of the

amount by which the difference

aforesaid exceeds Rs. 14.500:

(b) where—

(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

52 of 1903.

(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)

(2)

where the amount of the

difference does not exceed

Rs. 63,000

where

tho

amount of

the

difference

excDens

Rs. 65,000 but

does not

exceed Rs. 1,30,000

3 per cent, of the amount of Jiich

difference;

Rs. 3,250 vlus 10 per cent, of the

amount by which the difference

aforesaid exceeds Rs. 63,000;

SEC 11

THE GAZETTE Of INDIA EXTRAORDINARY

127

(3) where

the

amouni

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

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)

(2)

(3)

(4)

(6)

where the total Income does

not

exceed Rs. 5,000

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

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

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

which

the total

income exceeds Rs. 20,000;

Rs. 3,750 plus 41 per cent, of the

amount

whicn

the total

income exceeds Rs. 25,000:

Provided that—

(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

12^g

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

(1)

(2)

(3)

(4)

where the total income does not

exceed Rs. 25,000

where the

total

Income exceeds

Rs. 25,000 but does not exceed

Rs. 50,000

where the total

income exceeds

Rs. 50,000 but

does

net exceed

Rs. 1,00,000

where the total income

exceeds

KB. 1,00,000

Nil;

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

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.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

1A9

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.

31 of 1956.

Paragraph E

In the case of the Life Insurance Corporation of India established

under the Life Insurance Corporation Act, 1956,—

Rates of income-tax

(ii)

on that part of Its total income

which consists of profits and gains

from life insurance business

on the balance, if any, of the

total income

52-5 per cant;

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

31 of 19B8.

In the case of a company, other than the Life Insurance Corpora-

tion of India established under the Life Insurance Corporation Act,

1956,—

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

130

THE GAZETTE OF INDIA EXTRAORDINAHY

[PABT II

(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)

clause

(•) or clause (b) of sub-

MCtlon (4) of section 104

of the Income-tax Act,

(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.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

131

(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

132

THE GAZETTE OF INDIA EXTRAORDINABY

[PABT II

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

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

Kate of

income-tax

1. In the case of a person other than

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-

dent In India—

(i) on the whole income

(ex-

cluding interest payable on

a tax free security)

({{) on the income

by way

interert payable

on a tax

free security

18 par cent.

e-tax

Rate of

surcharge

4 per cent.;

income-tax at 25 per cent, and

surcharge at 8 per cent, of the

amount of the income

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

SEC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

133

Income-tax

Rate of

Income-tax

Rate of

surcharge

2. In the case of a company—

(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

domestic company—

(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

(H) on the Income by way of

dividends payable by any

domestic

company

other

than a company referred to

in (i) hereinabove

(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

(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

(v) on the income by way of

Interest payable on a tax

free security

(vi) on any other income

22 per cent

15 per cent.

25 pter cent.

90 per cent.

50 per cent

44 per cent.

70 per cent.

Nil

Nil

Nil

134

THE GAZETTE OF INDIA EXTRAORDINAKY

[PAST II

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:

SEC 1]

THE GAZETTE OF INDIA EXTEAORDINABY

I35

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

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

specified in a scheme framed under section 280W.".

136

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—SEC. i]

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,