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FINANCE ACT, 1986
23 of 1986
An Act to give effect to the financial proposals of the Central Government for the financial year 1986-87 BE it enacted by Parliament in the Thirty-seventh Year of the Republic of India as follows :---
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called The Finance Act 1986.
(2) Save as otherwise provided in this Act, sections 2-to47-(excepts sections 27-,34-,35-and36-) shall be deemed to have come into force on the 1st day of April, 1986.
SECTION 02: INCOME-TAX
(1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 1986, income-tax shall be charged at the rates specified in Part I of the First Schedule and shall be increased in the cases to which Paragraph E of that Part applies, by a surcharge, calculated in each case in the manner provided therein :- Provided that where an assessee, being a company, has made, during the financial year commencing on the 1st day of April, 1985 any deposit with the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964-, under the Companies Deposits (Surcharge on Income-tax) Scheme, 1985, then, the surcharge on income- tax payable by the company,----
(a) in a case where the amount of the deposit so made is equal to, or exceeds, the amount of surcharge on income-tax payable by it shall be nil, and
(b) in a case where the amount of the deposit so made falls short of the amount of surcharge on income-tax payable by it, shall be reduced by the amount of the deposit.
(2) In the cases to which sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part I of the First Schedule applies, where the assessee has, in the previous year, any net agricultural income exceeding six hundred rupees, in addition to total income, and the total income exceeds,---
(i) in a case to which the said Sub-Paragraph I applies, eighteen thousand rupees, and
(ii) in a case to which the said Sub-Paragraph II applies, twelve thousand rupees, then,--
(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the net agricultural income were comprised in the total income after,---
(i) in a case to which the said Sub-Paragraph I applies, the first eighteen thousand rupees, and
(ii) in a case to which the said Sub-Paragraph II applies, the first twelve thousand rupees, of the total income but without being liable to tax], only for the purpose of charging income-tax in respect of the total income; and
(b) the income-tax chargeable shall be calculated as follows :---
(i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be determined in respect of the aggregate income at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if such aggregate income Were the total income:
(ii) the net agricultural income shall be increased,---
(A) in a case to which they said Sub-Paragraph I applies, by a sum of eighteen thousand rupees; and
(B) in a case to which they said Sub-Paragraph II applies, by a sum of twelve thousand rupees, and the amount of income-tax shall be determined in respect of the net agricultural income as so increased at the rates specified in Sub-Paragraph I or, as the case may be Sub-Paragraph II of the said Paragraph A, as if the net agricultural income as so increased were the total income;
(iii) the amount of income-tax determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax in respect of the total income.
(3) in cases to which the provisions of Chapter XII or Chapter XII-A or sub-section (1A) of section 161-orsection 164-orsection 164A-orsection 167A of the Income-tax Act, 1961-(hereinafter referred to as the Income tax Act) apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub- section (1) or the rates as specified in that Chapter or section, as the case may be.
(4) In cases in which tax has to be deducted under Sections 193-,194-,194-A-,194-B-,194-. BB(5) Subject to the provisions of sub-section (6), in cases in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the Income-tax Act-or charged under sub-section (4) of section 172-or sub-section (2) of section 174-orsection 175-or sub-section (2) of section 176-of the said Act or deducted under section 192-of the said Act from income chargeable under the head "Salaries" or deducted under sub-section. (9) of section 80-Esection 161-orsection 164-orsection 164-A-orsection 167A of the Income-tax Act-apply, "advance tax" shall be computed with reference to the rates imposed by this sub- section or the rates as specified in that Chapter or section, as the case may be.
(6) In the cases to which Sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part III of the First Schedule applies, where the assessee has, in the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than the previous year, in such other period, any net agricultural income exceeding six hundred rupees, in addition to total income and the total income exceeds,---
(i) in a case to which they said Sub-Paragraph I applies, eighteen thousand rupees, and
(ii) in a case to which they said Sub-Paragraph II applies, twelve thousand rupees, then, in calculating income-tax under the first proviso to sub-section (5) of section 132 of the Income-tax Act-or in charging Income-tax under sub-section (2) of section 174-orsection '175-or sub-section (2) of section 176-of the said Act or in computing the "advance tax" payable under Chapter XVII-C of the said Act, at the rate or rates in force,---
(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after, ---
(i) in a case to which they said Sub-Paragraph I applies, the first eighteen thousand rupees, and
(ii) in a case to which they said Sub-Paragraph II applies, the first twelve thousand rupees, of the total income but without being liable to tax], only for the purpose, of calculating, charging or computing such income-tax or, as the case may be, "advance tax" in respect of the total income; and
(b) such income-tax or, as the case may be, "advance tax" shall be so calculated, charged or computed as follows:--- (i) the total income and the net agricultural income shall be aggregated and the amount of income-tax or "advance tax" shall be determined in respect of the aggregate income at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if such aggregate income were the total income;
(ii) the net agricultural income shall be increased,-
(A) in a case to which they said Sub-Paragraph I applies, by a sum of eighteen thousand rupees; and
(B) in a case to which they said Sub-Paragraph II applies, by a sum of twelve thousand rupees, and the amount of income-tax or "advance tax" shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Sub-Paragraph I or, as the case may be, the said Sub-Paragraph II, as if the net agricultural income as so increased were the total income:
(iii) the amount of income-tax or "advance tax" determined in accordance with sub- clause (i) shall be reduced by the amount of income-tax or, as the case may be, "advance tax" determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as the case may be, "advance tax" in respect of the total income.
(7) For the purposes of this section and the First Schedule,---
(a) "Company in which the public are substantially interested" means a company which is such a company as is referred to in 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 commencing on the 1st day of April, 1986, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income in accordance with the provisions of section 194-of that act;
(c) "insurance commission" means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies-of insurance);
(d) "investment company means" a company whose gross total income (as defined in section 80B of the Income-tax Act-) consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources";
(e) "net agricultural income", in relation to a person means the total amount of agri- cultural income, from whatever source derived, of that person computed in accordance with the rules contained in Part IV of the First Schedule;
(f) "tax-free security" means any security of the Central Government issued or dedared 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;
(g) "trading company" means a company whose business consists mainly in dealing in goods or merchandise manufactured, produced or processed by a person other than that company and whose income attributable to such business included in its gross total income (as defined in section 80B of the Income-tax Act-) is not less than fifty-one percent. of the amount of such gross total income;
(h) all other words and expressions used in this section or in the First Schedule but not defined in this sub-section and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act.
SECTION 03: 3-39
Amended the following sections of the Income-tax Act, which are being incorporated in the principal Act and. hence not printed here at, Sections affected are 10,16; 23; 24; 32A; 32AB; (ins.); 43; 50; 54; 54E; 55; 58; 74; 74A; 80GG; 80HHA; 80K (omitted); 80L; 80M (subst.); 80S (omitted); 80T; 80TT (omitted); 115A; 115BB (ins.); 133B (ins.); 155;-193; 194B; 194BB; 204; 269RR (ins.); CHAP.XXC (containing Ss. 269UA to 269UO - ins); 272AA (ins.); 276 AB (ins.); 276AA (omitted); twelfth Sch. (omitted);section 39-made consequential amendments to certain sections.
SECTION 40: AMENDMENT OF ACT 27 OF 1957
- In section 5 of the Wealth-tax Act, 1957,-
(a) in sub-section (1),---
(i) after clause (xvid), the following clause shall be inserted, namely:-
(A) in the case of an individual or a Hindu undivided family, such debentures issued by a public sector company, as the Central Government may, by notification in the official Gazette, specify in this behalf.
Explanation.- For the purposes of this clause, "public sector company" means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act 1956-;---
(A) in the opening paragraph, after the words "out of such money" the words "within one year immediately preceding the date of his return and at any time thereafter" shall be inserted with effect from the 1st day of April, 1987;
(B) the Explanation shall be numbered as Explanation I and after Explanation I as so numbered, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1977, namely;-
Explanation 2.- For the removal of doubts, it is hereby declared that moneys standing to the credit of such person in a Non-resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973-and any rules made there under, on the date of his return to India, shall be deemed to be moneys brought by him into India on that date",
(b) in sub-section (3),---
(i) after the brackets, figures and letter "(xvid)", the brackets, figures and letter "(xvie)", shall be inserted;
(ii) for clause (aa), the following clause shall be substituted, namely; "(aa) in the case of Capital Investment Bonds referred to in clause (xvid), or debentures referred to in clause (xvie),of sub-section (1), from the date on which the Bonds or debentures, as the case may be, were subscribed to by the assessee, or for a period of at least six months ending with the relevant valuation date, whichever is shorter; and"
SECTION 41: 41-46
[Amendments incorporated in the Gift-tax Act, 1958].
SECTION 47:
[Amendment incorporated in the Companies (Profits) Surtax Act, 1964].
SECTION 48: CUSTOMS TARIFF ACT, 1975
- [Amendments incorporated in the Principal Act].
SECTION 49: AUXILIARY DUTIES OF CUSTOMS
(1) In the case of goods mentioned in the First Schedule to the Customs Tariff Act; or in that Schedule as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal to fifty percent. of the value of goods as determined in accordance with the provisions of section 14 of the Customs Act, 1962-(hereinafter referred to as the Customs Act).
(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1987, 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 auxiliary duties of customs referred to in sub-section (1) shall be in addition to any duties of customs chargeable on such goods under the Customs Act or any other law for the time being in force.
(4) The provisions of the Customs Act-, and the rules and regulations made there under, 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 auxiliary duties 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, as the case may be
SECTION 50:
[Amendments incorporated in the Customs 1962].
SECTION 51:
[Amendments incorporated in the Central Excises and Salt Act, 1944].
SECTION 52:
[Amendments incorporated in the Principal Act].
SECTION 53: SPECIAL DUTIES OF EXCISE
(1) In the case of goods chargeable with a duty of excise under the Central Excises Act as amended from time to time, read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, (not being a notification providing for any exemption for giving credit with respect to, or reduction of duty of excise under the said Act on such goods equal to any duty of excise under the said Act, or the additional duty under section 3 of the Customs Tariff Act, already paid on the raw material or component parts used in the production or manufacture of such goods) there shall be levied and collected a special duty of excise equal to ten percent. of the amount so chargeable on such goods.
(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1987 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 special duties of excise referred to in sub-section (1) shall be in addition to any duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force.
(4) The provisions of the Central Excises Act and the rules made there under 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 special 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, as the case may be.
SECTION 54: AMENDMENT OF ACT 12 OF 1953
- In the Khadi and other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 19531,---
(i) in section 2. for clause (b), the following clause shall be substituted, namely:- (b) "cloth" means textile fabrics falling under heading Nos. 50.03, 51.06, 51 '07, 51.08. 55.08, 55.09, 55.10, 55.11, 55.12, 58.02, 58.04 and 60.01 the Schedule to theCentral Excise Tariff Act, 1985;
(ii) in section 3-, in sub-section (1), for the figures and words "1.9 naya paise per square metre", the figures and words "2.5 paise per sequare metre" shall be submitted.
SECTION 55:
[Amendment incorporated in the Additional Duties of Excise (Goods of Special Importance) Act 1957].
SECTION 56:
[Amendments incorporated in the Additional duties of Excise (Textiles and Textile Articles Act, 1978).
SCHEDULE 01:
(Seesection 2-)PART 1 INCOME-TAX, SURCHARGE ON INCOME-TAX Paragraph A Sub-Paragraph I In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act-, not being a case to which Sub- Paragraph II of this Paragraph or any other Paragraph of this Part applies. Rates of income-tax (1) where the total income does not exceed NiL Rs. 18,000 (2) where the total income exceeds Rs. 18,000 25 percent. of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs. 18,000; (3) where the total income exceeds Rs. 25,000 Rs. 1,750 plus 30 percent. of the amount by which but does not exceed Rs.50,000 the total income exceeds Rupees 25.000; (4) where the total income exceeds Rs. 50,000 Rs. 9,250 plus 40 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs. 29.250 plus 50 percent of the amount by which the total income exceeds Rupees 1,00,000. Sub-Paragraph II In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the , 1st day of April, 1986 exceeds Rs. 18,000,--- (1) where the total income does not exceed Nil; Rs. 12.000 (2) where the total income exceeds Rs. 12,000 25 percent. of the amount by which the total income but does not exceed Rs. 20,000 exceeds Rs. 12,000; . i; (3) where the total income exceeds Rs. 20,000 Rs. 2,000 plus 30 percent. of the amount by which but does not exceed Rs. 40,000 the total income exceeds Rupees 20,000; (4) where the total income exceeds Rs. 40,000 Rs. 8,000 plus 40 percent. of the amount by, winch but does not exceed Rs. 60,000 the total income exceeds Rupees 40,000; ' (5) where the total income exceeds Rs. 60,000 Rs. 16,000 plus 50 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 60,000; (6) where the total income exceeds Rs. 1,00,000 Rs. 36,000 plus 55 percent. of the amount by which the total income exceeds Rupees 1,00,000. Paragraph B In the case of every co-operative society, --- Rates of income-tax (1) where the total income does not exceeds 15 percent. of the total income; Rs. 10,000 (2) where the total income exceeds Rs. 10,000 Rs. 1,500 plus 25 percent. of the amount by which ' but does not exceed Rs. 20,000 the total income exceeds Rupees 10,000; (3) where the total income exceeds Rs. 20,000 Rs. 4,000 plus 40 percent. of the amount by which ,' the total income exceeds Rs. 20,000. \ Paragraph C Sub-Paragraph I In the case of every registered firm, not being a case to which Sub-Paragraph II of this Paragraph applies,--- Rates of Income-tax (1) where the total income does not exceed Nil; Rs. 10,000 (2) where the total income exceeds Rs. 10,000 5 percent. of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs. 10,000; (3) where the total income exceeds Rs. 25,000 Rs. 750 plus 7 percent. of the amount by which but does not exceed Rs. 50,000 the total income exceeds Rupees 25,000; (4) where the total income exceeds Rs. 50,000 Rs. 2,500 plus 15 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs.10,000 plus 24 percent. of the amount by which the total income exceeds Rupees 1,00,000. Sub-Paragraph 11 In the case of every registered firm whose total income includes income derived from a profession carried on by it and the income so included is not less than fifty-one percent. of such total income,--- Rates of income-tax (1) where the total income does not exceed Nil; Rs. 10,000 (2) where the total income exceeds Rs. 10,000 4 percent. of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs. 10,000; (3) where the total income exceeds Rs. 25,000 Rs. 600 plus 7 percent. of the amount by which but does not exceed Rs. 50,000 the total income exceeds Rupees 25,000; (4) where the total income exceeds Rs. 50,000 Rs. 2,350 plus 13 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs. 8.850 plus 22 percent. of the amount by which the total income exceeds Rupees 1,00,000. Explanation.--- For the purposes of this Paragraph, "registered firm" includes an unregistered firm assessed as a registered firm under clause (b) of section 183 of the Income-tax Act-. Paragraph D In the case of every local authority, --- Rate of income-tax On the whole of the total income 50 percent. Paragraph E In the case of a company, Rates of income-tax 1, In the case of a domestic company,--- (1) where the company is a company in 50 percent. of the total income; which the public are substantially interested,--- (2) where the company is not a company in which the public are substantially interested--- (i) in the case of a trading company or 60 percent. of the total income; an investment company (ii) in any other case 55 percent. of the total income; 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 Govern- ment or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976, or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976; and where such agreement has, in either 50 percent.; case, been approved by the Central Government 65 percent.; (ii) on the balance, if any, of the total income Surcharge on income-tax The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five percent of such income-tax. PART II RATES OF DEDUCTION OF TAX AT SOURCE IN CERTAIN CASES In every case in which under the provisions of sections 193-,194-,194A-,194B-;194BB-.194DIn the case of aperson other than acompany--- (a) where the person is resident in India--- (i) on income by way of interest other 10 percent.. than "Interest on securities" (ii) on income by way of winnings from 40 percent.. . lotteries and crossword puzzles (iii) on income by way of winnings from 40 percent.; from horse races (iv) on income by way of insurance 10 percent.; commission (v) on income by way of interest pay- able on --- 10 percent.; (A) any security, other than a tax- free security, of the Central or a State Government; (B) any debentures or other securities for money issued by or on be- half of any local authority or a corporation established by a Central, State or Provincial Act; (C) any debentures issued by a company where such debentures are listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956-and any rules made there under. (vi) on any other income (extending inte- 20 percent.; rest payable on a tax-free security) (b) where the person is not resident in India-- (i) in the case of a non-resident Indian-- (A) on investment income and 20 percent long-term capital gains (B) on income by way of interest 15 percent; payable on a tax-free security (C) on the whole of the other income-tax at 30 percent. of the amount of income the income, or income-tax in respect of the income at the rates prescribed in Sub-Paragraph I of Paragraph A of part III of this Schedule, if such income had been the total income, whichever is higher; (ii) in the case of any other person- (A) on the whole of income income-tax at 30 percent. of the amount (excluding interest payable of the income, on a tax-free security) or income-tax in respect of the income at the rates prescribed in Sub-Paragraph I of Paragraph A Of part III of this Schedule, if such income had been the total income, whichever is higher; (B) on income by way of interest 15 percent.; payable on a tax-free 'security 2. In the case of a company--- (a) where the company is a domestic company --- (i) on income by way of interest Other 20 percent.; than "Interest on securities" (ii) on any other income (excluding inte- 21.5 percent.; rest payable on a tax-free security) (b) where the company is not a domestic company--- (i) on income by way of dividends 25 percent.: payable by any domestic company (ii) on income by way of interest payable 25 percent.; by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (iii) on income by way of royalty pay- 30 percent.; able by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1976, where such royally is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the proviso to sub section (1A) of section 115A Of the Income-tax Act-, to the Indian concern (iv) on income by way of royalty [not being royalty of the nature referred to in sub-item (b) (iii)] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and which has been approved by the Central Government--- (A) where the agreement is made after 50 percent.; the 31st day of March, 1961 but before the 1st day of April, 1976 (B) where the agreement is made after 30 percent.; the 31st day of March, 1976--- (v) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and which has been approved by the Central Government- (A) where the agreement is made 50 percent.; after the 29th day of February, 1964 but before the 1st day of April, 1976 (B) where the agreement is made 30 percent.; after the 31st day of March. 1976 (vi) on income by way of interest payable 44 percent.; on a tax-free security (vii) on any other income 65 percent. Explanation.--- For the purposes of this Part, "investment income", "long term capital gains" and "non- resident Indian" shall have the meanings assigned to them in chapter XII-A of the Income-tax Act. PART III RATES FOR CALCULATING OR CHARGING INCOME-TAX IN CERTAIN CASES DEDUCTING INCOME TAX FROM INCOME CHARGEABLE UNDER THE HEAD "SALARIES" OR ANY PAYMENT REFERRED TO IN SUB-SECTION (9) OF SECTION 80E AND COMPUTING "ADVANCE TAX". In cases in which income-tax has to be calculated under the first proviso to sub-section (5) of S. 133 of the Income-tax Act or charged under sub-section (4) of section 172-or sub-section (2) of section 174-orsection 175-or sub-section (2) of section 176-of the said Act or deducted under section 192-of the said Act from income chargeable under the head "Salaries" or deducted under sub-section (9) of section 80E-of the said Act from any payment referred to in the said sub-section (9) or in which the "advance tax" payable under Chapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-tax or, as the case may be, "advance lax" (not being "advance tax" in respect of any income chargeable to tax under Chapter XII or Chapter XII-A or sub-section (IA) of section 161-orsection 164-orSection 164A-orSection 167A of the Income-lax Act-at the rates as specified in that Chapter or section), shall be so calculated, charged, deducted or computed at the following rate or rates :--- Paragraph A Sub-Paragraph I In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of cl. (31 ) of section 2 of the Income-tax Act-, not being a case to which Sub-Paragraph II of this paragraph or any other Paragraph of this Part applies, --- Rates of income-tax (1) where the total income does not exceed Nil; Rs. 18,000 (2) where the total income exceeds Rs. 18.000 25 percent. of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs, 18,000; (3) where the total income exceeds Rs. 25,000 Rs. 1,750 plus 30 percent. of the amount by which but does not exceed Rs. 50,000 the total income exceeds Rupees 25,000; (4) where the total income exceeds Rs. 50,000 Rs. 9,250 plus 40 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs. 29,250 plus 50 percent. of the amount by which the total income exceeds Rupees 1,00,000. Sub-Paragraph II In the case of every Hindu undivided family which at any time during the previous year, has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1987 exceeds Rs. 18,000. Rates of income-tax (1) where the total income does not exceed Nil; Rs. 12,000 (2) where the total income exceeds Rs. 12,000 25 percent. of the amount by which the total income but does not exceed Rs. 20,000 exceeds Rs. 12,000; (3) where the total income exceeds Rs. 20,000 Rs. 2,000 plus 30 percent. of the amount by which but does not exceed Rs. 40,000 the total income exceeds Rupees 20,000; (4) where the total income exceeds Rs. 40,000 Rs. 8,000 plus 40 percent. of the amount by which but does not exceed Rs. 60,000 the total income exceeds Rupees 40,000; (5) where the total income exceeds Rs. 60,000 Rs. 16,000 plus 50 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 60,000; (6) where the total income exceeds Rs. 1,00,000 Rs. 36,000 plus 55 percent. of the amount by which the total income exceeds Rupees 1,00,000. Paragraph B In the case of every co-operative society,--- Rates of income-tax (1) where the total income does not exceed 15 percent. of the total income.; Rs. 10,000 (2) where the total income exceeds Rs. 10,000 Rs, 1,500 plus 25 percent. of the amount by which but does not exceed Rs. 20,000 the total income exceeds Rs. 10,000; (3) where the total income exceeds Rs. 20,000 Rs. 4,000 plus 40 percent. of the amount by which the total income exceeds Rupees 20,000. Paragraph C Sub-Paragraph I In the case of every registered firm, not being a case to which Sub-Paragraph, II of this Paragraph applies,--- Rates of income-tax (1) where the total income does not exceed Nil; Rs. 10,000 (2) where the total income exceeds Rs,10,000 5 percent. of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs. 10,000 (3) where the total income exceeds Rs. 25,000 Rs. 750 plus 7 percent. of the amount by which but does not exceed Rs. 50,000 the total income exceeds Rupees 25,000; (4) where the total income exceeds Rs, 50,000 Rs. 2,500 plus 15 percent. of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs. 10,000 plus 24 percent. of the amount by which the total income exceeds Rupees 1,00,000. Sub-Paragraph II In the case of every registered firm whose total income includes income derived from a profession carried on by it and the income so included is not less than fifty one percent. of such total income, --- Rates of income-tax (1) where the total income does not exceed Nil; Rs. 10,000 (2) where the total income exceeds Rs. 10,000 4 percent of the amount by which the total income but does not exceed Rs. 25,000 exceeds Rs. 10,000; (3) where the total income exceeds Rs. 25,000 Rs. 600 plus 7 percent. of the amount by which but does not exceed Rs. 50,000 the total income exceeds Rupees 25,000; (4) where the total income exceeds Rs. 50,000 Rs. 2,350 plus 13 percent of the amount by which but does not exceed Rs. 1,00,000 the total income exceeds Rupees 50,000; (5) where the total income exceeds Rs. 1,00,000 Rs. 8,850 plus 22 percent of the amount by which the total income exceeds Rupees 1,00,000. Explanation ---For the purposes of this Paragraph "registered firm" includes an unregistered firm assessed as a registered firm under Clause (b) of section 183 of the income-tax Act-. Paragraph D In the case of every local authority,--- Rate of Income-tax On the whole of the total income 50 percent. Paragraph E In the case of a company,--- Rates of income-tax 1. In the case of a domestic company,--- (1) where the company is a company 50 percent. of the total income; in which the public are substantially interested,--- (2) where the company is not a company in which the public are substantially (i) in the case of a trading company 60 percent. of the total income; or an investment company (ii) in any other base 55 percent. of the total income. 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 Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976, or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February 1964 but before the 1st day of April, 1976, and where such agreement has. in 50 percent.; either case, been approved by the Central Government (ii) on the .balance, if. any, 65 percent. of the total income PART IV [See section 2 (7) (e)-] RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME Rule 1. --- Agricultural income of the nature referred to in sub-clause (a) of clause (1) of section 2 of the Income-tax Act-shall be computed as if it were income chargeable to income-tax under that Act under the head "Income from other sources" and the provisions of sections 57-to59-of that Act shall, so far as may be, apply accordingly : Provided that sub-section (2) of section 58-shall apply subject to the modification that the reference tosection 40A-therein shall be construed as not including a reference to sub-sections (3) and (4) of section 40A.-Rule 2. --- Agricultural income of the nature referred to in sub-clause (b) or sub-clause (c) of clause (1) of section 2 of the Income-tax Act-[other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed as if it were income chargeable to income-tax under that Act under the head "Profits and gains of business or profession" and the provisions of sections 30-,31-,32-,34-,36-,37-.38Rule 3. --- Agricultural income of the nature referred to in sub-clause (c) of clause (1) of section 2 of the Income-tax Act-, being income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were income chargeable to income-tax under that Act under the head "Income from house property" and the provisions of sections 23-to27-of that Act shall, so far as may be, apply accordingly: Provided that sub-section (2) of the said section 23-shall apply subject to the modifications that the , references to "total income" therein shall be construed as references to net agricultural income and that the words, figures and letters "and before making any deduction under Chapter VIA" shall be omitted. Rule 4. - Notwithstanding anything contained in any other provisions of these rules, in a case where the assessee derives income from sale of tea grown and manufactured by him in India, such income shall be computed in accordance with rule 8 of the Income-tax Rules, 1962, and sixty percent. of such income shall be regarded as the agricultural income of the assessee. Rule 5. --- Where the assessee is a partner of a registered firm or an unregistered firm assessed as a registered firm under clause (b) of section 183 of the Income-tax Act-, which in the previous year has any agricultural income, or is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of the said section 183-and which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an unregistered firm but has any agricultural income, then, the agricultural income or loss of the firm shall be computed in accordance with these rules and his share in the agricultural income or loss of the firm shall he computed in the manner laid down in sub-section (1), sub-section (2) and sub-section (3) of section 67 of the Income-tax Act-and the share so computed shall be regarded as the agricultural income or loss of the assessee. Rule 6. --- Where the assessee is a member of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) but has any agricultural income, then, the agricultural income or loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee. Rule 7. --- Where the result of the computation for the previous year in respect of any source of agricultural income is a loss, such loss shall be set off against the income of the assessee, if any, for that previous year from any other source of agricultural income : Provided that where the assessee is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of section 183 of the Income-tax Act-or is a member of an association of persons or a body of individuals and the share of the assessee in the agricultural income of the firm, association or body, as the case may be, is a loss, such loss shall not be set off against any income of the assessee from any other source of agricultural income. Rule 8. --- Any sum payable by the assessee on account of any tax levied by the State Government on the agricultural income shall be deducted in computing the agricultural income. Rule 9. --- (1) Where the assessee has in the previous year relevant to the assessment year commencing on the 1st day of .April, 1986, any agricultural income and the net result of the computation of the agricultural income of the assessee for any one of more of the previous years relevant to the assessment years commencing on the 1st day of April, 1978 or the 1st day of April, 1979 or the 1st day of April, 1980 or the 1st day of April, 1981, or the 1st day of April, 1982 or the 1st day of April, 1983 or the 1st day of April, 1984 or the 1st day of April, 1985 is a loss, then, for the purposes of sub-section (2) of section 2-of this Act,--- (i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1978, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1979 or the 1st day of April, 1980 or the 1st day of April, 1981, or the 1st day of April, 1982 or the 1st day of April, 1983 or the 1st day of April, 1984 or the 1st day of April, 1985, (ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1979, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1980, or the 1st day of April, 1981 or the 1st day of April, 1982 or the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, (iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1980, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, or the 1st day of April, 1982 or the 1st day of April, 1983 or the 1st day of April, 1984, or the 1st day of April, 1985, (iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1982 or the 1st day of April. 1983 or the 1st day of April, 1984 or the 1st day of April, 1985, (v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1982, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1983 or the 1st day of April, 1984 or the 1st day of April, 1985, (vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1983, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1984 or the 1st day of April, 1985, (vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1984, to the extent,, if any such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1985, and (viii)the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April; 1985, shall be-set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on
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