Income-tax Act : Incomes not included in total income. Relief Bonds 1987, notified by notification

Income-tax Act,1961

Act No : 43

Section : Incomes not included in total income. Relief Bonds 1987, notified by notification dated 17-11- 1987, shall be deemed to have been notified for the purposes of this sub-clause: 7 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.

10. Incomes not included in total income In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (1) agricultural income; (2) 1[subject to the provisions of sub-section (2) of section 64,] any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family; 2[(2A) in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm. Explanation.-For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits;] 3[(3) any receipts which are of a casual and non-recurring nature, 4[to the extent such receipts do not exceed five thousand rupees in the aggregate:] 5[Provided that where such receipts relate to winnings from races including horse races, the provisions of this clause shall have effect as if for the words "five thousand rupees", the words "two thousand five hundred rupees" had been substituted: Provided further that) this clause shall not apply to- (i) capital gains chargeable under the provisions of section 45; or --------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment) Act, 1970 w.e.f. 1-4- 1971. 2 Inserted by the Finance Act, 1992, w.e.f. 1-4-1993. Earlier, clause (2A) was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 but was omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from the same date. 3 Substituted by the Finance Act, 1972, w.e.f. 14-1972. Section 59 of the said Finance Act has made the following special provision in this regard: "59. Certain casual and non-recurring receipts not to be included in the total income for the assessment year 1972-73.- Notwithstanding the amendments made by this Act to the Income-tax Act, in computing, in the case of any person, the total income of a previous year relevant to the assessment year commencing on the 1st day of April, 1972, any income falling within clause (3) of section 10 of the Income-tax Act as it stood immediately before the 1st day of April, 1972, shall not be included." 4 Substituted for 'not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate' by the Finance Act, 1986, w.e.f. 1-4-1987. 5 Substituted for 'Provided that' by the Finance Act, 1992, w.e.f. 1-4-1992. --------------------------------------------------------------------- 1.68 (ii) receipts arising from business or the exercise of a profession or occupation; or (iii) receipts by way of addition to the remuneration of an employee;] I[* * *] 2[(iv)* * * *] 3[(4)(i) in the case of a non-resident, any income by way of interest on ---------------------------------------------------------------------- 1 The word 'or' omitted by the Finance Act, 1992, w.e.f. 1-4-1992. Earlier, it was inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 2 Omitted by the Finance Act, 1992, w.e.f. 1-4-1992. Prior to the omission, clause (iv), as inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991, read as under: "(iv) winnings from races including horse races;" 3 Substituted for clauses (4) and (4A) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to the substitution, clause (4), as amended by the Finance Act, 1964, w.e.f. 1-4-1964, and clause (4A), as inserted by the Finance Act, 1964, w.e.f. 1-4-1965; amended by the Finance Act, 1968, w.e.f. 1-4-1969 and substituted by the Finance Act, 1982, w.e.f. 1-4-1982, read as under: -> -> 1.69 such securities or bonds as the Central Government may, by notification in the Official Gazette, specify in this behalf, including income by way of premium on the redemption of such bonds; 1[(ii) 2 in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the rules made thereunder: Provided that such individual is a person resident outside India as defined in clause (q) of section 23 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account;] --------------------------------------------------------------------- -> -> "(4) in the case of a non-resident, any income from interest on such securities as the Central Government may, by notification in the Official Gazette, specify in this behalf, or any income from interest on, or from premium on the redemption of, any bonds issued by the Central Government under a loan agreement between the Central Government and the International Bank for Reconstruction and Development or under a loan agreement between the Central Government and the Development Loan Fund of the United States of America or by any industrial undertaking or financial corporation in India under a loan agreement with the said Bank or Fund, as the case may be, which is guaranteed by the Central Government; (4A) in the case of a per-son resident outside India, any income from interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder. Explanation.-In this clause, 'person resident outside India" shall have the meaning assigned to it in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973);" 1 Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. Prior to the substitution, sub-clause (ii) read as under: "(ii) in the case of an individual, who is a person resident outside India as defined in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the said Act and the rules made thereunder;" ---------------------------------------------------------------------- 1.70 August, 1990 would be eligible for exemption under section 10(4)(ii) in respect of NRE/FCNR accounts maintained upto 30th June, 1991. [(4A) Substituted by clause 10(4)(ii), supra, by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April, 1989.] 1[(4B) in the case of an individual.. being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued by the-Central Government as that Government may, by notification in the Official Gazette, specify in this behalf: Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder. Explanation.-For the purposes of this clause,- (a) a per-son shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India; (b) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder;] 2[(5) 'in the case of an individual, the value of any travel concession or --------------------------------------------------------------------- 1 Inserted by the Finance Act, 1982, w.e.f. 1-4-1983. 2 Substituted by the Direct Tax Laws (Second Amendment) Act, 1989, w.r.e.f. 1-4-1989. Prior to the substitution, clause (5), as substituted by the Taxation Laws (Amendment) Act, 1970, w.r.e.f. 14- 1962 and amended by the Finance Act, 1975, w.e.f. 14-1975, read as under: "(5) subject to such conditions as the Central Government may prescribe, in the case of an individual being a citizen of India,- (i) in relation to any assessment year not being an assessment year commencing after the 1st day of April, 1970, the value of any travel concession or assistance received by or due to such individual,- (a)from his employer for himself, his spouse and children, in connection with his proceeding on leave to his home-district in India; (b)from his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home-district in India after retirement from service or after the termination of his service; (ii) in relation to any other assessment year, the value of any travel concession or assistance received by or due to such individual,- (a)from his employer for himself and his family, in connection with his proceeding on leave to any place in India; (b)from his employer or former employer for himself, and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service: Provided that the amount exempt under item (a) or item (b) of this sub-clause shall not, except in such cases and under such circumstances, as may be prescribed, having regard to the travel concession or assistance granted to the employees of the Central Government, exceed the value of the travel concession or assistance which would have been received by or due to the individual in connection with his proceeding to his home district in India on leave or, as the case may be, after retirement from service -> -> 1.71 assistance received by, or due to, him,- (a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India; (b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government: Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel. Explanation.-For the purposes of this clause, "family", in relation to an individual, means- (i) the spouse and children of the individual; and (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;] 2. Home district: Meaning.-The following criteria have been laid down for determining home district for the purposes of section 10(5): --------------------------------------------------------------------- -> -> or after the termination of his service. Explanation.-For the purposes of this sub-clause, "family", in relation to an individual, means- (i) the spouse and children of the individual; and (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual." The new clause (5) substituted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989 was again substituted by the Direct Tax Laws (Second Amendment) Act, 1989 with effect from the same date making the earlier amendment of academic interest only. --------------------------------------------------------------------- 1.72 (a) the place declared by the assessee is one which requires his physical presence at intervals, for discharging various domestic or social obligations and if so, after his entry into service he had been visiting that place frequently; or (b) the assessee owns residential property in the place or is a member of the joint family having such property there; or (c) his near relations are resident in that place; or (d) prior to his entry into service he had been living there for some years. If any of these conditions is satisfied, the assessee may be allowed to claim a particular place as his home district. 1[(5A) in the case of an individual who is not a citizen of India and is a non-resident, who comes to India solely in connection with the shooting of a cinematograph film in India by the individual, firm or company referred to in clause (d) of the Explanation to clause (i) of sub-section (1) of section 9, any remuneration received by him for rendering any service in connection with such shooting;] 2[(5B) in the case of an individual who renders services as a technician in the employment (commencing from a date after the 31st day of March, 1993) of the Government or of a local authority or of any corporation set up under any special law or of any such institution or body established in India for carrying on scientific research as is approved for the purposes of this clause or sub-clause (viia) of clause (6) by the prescribed authority or in any business carried on in India and the individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India and the tax on his income for such services chargeable under the head "Salaries" is paid to the Central Government by the employer (which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in section 200 of the Companies Act, 19563) (1 of 1956), the tax so paid by the employer for a period not exceeding forty-eight months commencing from the date of his arrival in India: Provided that the Central Government may, if it considers it necessary or expedient in the public interest so to do, waive the condition relating to non-residence in India as specified in this clause in the case of any individual who is employed in India for designing, erection or commissioning of machinery or plant or supervising activities connected with such designing, erection or commissioning. Explanation.-For the purposes of this clause, "technician" means a person having specialised knowledge and experience in- (i) constructional or manufacturing operations, or in mining or in the generation of electricity or any other form of power, or (ii) agriculture, animal husbandry, dairy farming, deep sea fishing or ship building, or (iii) such other field as the Central Government may, having regard to availability of Indians having specialised knowledge and --------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4- 1982. 2 Inserted by the Finance Act, 1993, w.e.f. 1-4-1994. ---------------------------------------------------------------------- 1.73 experience therein, the needs of the country and other relevant circumstances, by notification' in the Official Gazette, specify, who is employed in India in a capacity in which such specialised knowledge and experience are actually utilised;] (6) in the case of an individual who is not a citizen of India,- 2[(i) 3 subject to such conditions as the Central Government may prescribe, passage moneys or the value of any free or concessional passage received by or due to such individual- (a) from his employer, for himself, his spouse and children, in connection with his proceeding on home leave out of India; 4 [(aa) from his employer, for his children having full time education in any educational institution outside India, in connection with their proceeding to India during vacation;] (b) from his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home country out of India after retirement from service in India or after the termination of such service;] 5[(ii) the remuneration received by him as an official, by whatever name --------------------------------------------------------------------- 1 The fields of (i) grading and evaluation of diamonds for diamond export or import trade; (ii) cookery; and (iii) information technology including computer architecture systems platforms and associated technology, software development process and tools have been specified: 2 Substituted by the Taxation Laws (Amendment) Act, 1970, w.r.e.f 1-4-1962. 4 Inserted by the Finance (No. 2) Act, 1977, w.r.e.f. 1-4-1972. 5 Substituted for sub-clauses (ii) to (v) by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to the substitution, sub-clauses (ii) to (v) read as under: "(ii) the remuneration received by him as ambassador, high commissioner, envoy, minister, charged affaires, commissioner, counsellor or the secretary, adviser or attache of an embassy, high commission, legation or commission of a foreign State, for service in such capacity; (iii) the remuneration received by him as a consul de carrier, whether called a consul general, consul, vice- consul, consular agent, pro-consul or by any other name, of a foreign State for service in such capacity; (iv) the remuneration received by him as a trade commissioner or other official representative in India of the Government of a foreign State (not holding office as such in an honorary capacity), if the remuneration of the corresponding officials, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country; (v) the remuneration received by him as a member of the staff of any of the officials referred to in clause (ii), clause (iii) or clause (iv), if the member- (a) is a subject of the country represented-, (b) is not engaged in any business or profession or employment in India otherwise than as a member of such staff; and further, where the individual is a member of the staff of any official referred to in clause (iv) if the country represented has made corresponding provisions for similar exemptions in the case of members of the staff of the corresponding officials of the Government;". 1.74 called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of these officials, for service in such capacity: Provided that the remuneration received by him as trade commissioner or other official representative in India of the Government of a foreign State (not holding office as such in an honorary capacity), or as a member of the staff of any of those officials, shall be exempt only if the remuneration of the corresponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country: Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff;] (vi) the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled- (a) the foreign enterprise is not engaged in any trade or business in India; (b) his stay in India does not exceed in the aggregate a period of ninety days in such previous year; and (c) such remuneration is not liable to be deducted from the income of the employer chargeable under this Act; 1[(via) the remuneration received by him as an employee of, or a consultant to, an institution or association or a body established or formed outside India solely for philanthropic purposes, for services rendered by him in India in connection with such purposes, provided that such institution or association or body and the purposes for which his services are rendered in India are approved by the Central Government;] 2[(Vii) Omitted by the Finance Act, 1993, w.e.f 1-4-1993.] --------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10- 1975. 2 Prior to the omission, sub-clause (vii), as originally enacted and amended by the Finance Act, 1964, w.e.f. 1-4-1964; Finance Act, 1965, w.e.f. 1-4-1965 and the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971, read as under: "(vii) *the remuneration due to or received by him chargeable under the head 'Salaries' for services rendered as a technician in the employment (commencing from a date before the 1st day of April, 1971) of the Government or of a local authority or of any corporation set up under any special law or in any business carried on in India, if he was not resident in any of the four financial years immediately preceding the financial year in which he arrived in India to the extent mentioned below- (a) where his contract of service is approved by the Central Government before the commencement of his service or within one year of such commencement- (i) in the case of a technician who has special knowledge and experience in industrial or business management techniques, such remuneration due to or received by him during the period of six -> -> ---------------------------------------------------------------------- 1.75 1[(viia)'where such individual renders services as a technician in the employment 3[* * *] of the Government or of a local authority or of any corporation set up under any special law or of any such institution or body established in India for carrying on scientific research as is approved for the purposes of this sub-clause by the prescribed authority or in any business carried on in India and 4[the individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India,] the remuneration for such services due to or received by him, which is chargeable under the head "Salaries", to the extent mentioned below, namely:- --------------------------------------------------------------------- -> -> months commencing from the date of his arrival in India; (ii)in the case of any other technician, such remuneration due to or received by him during the thirty-six months commencing from the date of his arrival in India, and where any such person continues with the approval of the Central Government obtained before the 1st day of October of the relevant assessment year to remain in employment in India after the expiry of the thirty-six months aforesaid and the tax on his income chargeable under the head 'Salaries' is paid by the employer to the Central Government which tax in the case of an employer being a company may be paid notwithstanding anything contained in section 200 of the Companies Act, 1956 (1 of 1956), the tax so paid by the employer for a period not exceeding sixty months following the expiry of the thirty-six months aforesaid; (b) in any other case, not being the case of a technician who has special knowledge and experience in industrial or business management techniques, such remuneration due to or received by him for the period of three hundred and sixty-five days in all commencing from the date of his arrival in India. Explanation.-For the purposes of this sub-clause, 'Technician' means a person having specialised knowledge and experience in- (i)constructional or manufacturing operations, or in mining or in the generation or distribution of electricity or any other form of power, or (ii)industrial or business management techniques, who is employed in India in a capacity in which such specialised knowledge and experience are actually utilised;". 1 Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4- 1971. 3 The words '(commencing from a date after the 31st day of March, 1971)" omitted by the Finance Act, 1988, w.e.f. 1-4-1988. 4 Substituted for "the following conditions are fulfilled, namely, that- (1) the individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India, and (2) the contract of his service in India is approved by the Central Government, the application for such approval having been made to that Government before the commencement of such service or within six months of such commencement," by the Finance Act, 1992, w.e.f. 1-6-1992. --------------------------------------------------------------------- 1.76 1[(1) where such services commence from a date after the 31st day of March, 1971 but before the 1st day of April, 1988,- (A) such remuneration due to or received by him] during the period of twenty-four months commencing from the date of his arrival in India, in so far as such remuneration does not exceed an amount calculated at the rate of four thousand rupees per month, and where the tax on the excess, if any, of such remuneration for the period aforesaid over the amount so calculated is paid to the Central Government, by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in section 200 of the Companies Act, 1956 2 (1 of 1956)], also the tax so paid by the employer; and (B) where he continues, with the approval of the Central Government obtained before the 1st day of October of the relevant assessment year, to remain in employment in India after the expiry of the period of twenty-four months aforesaid and the tax on his income chargeable under the head "Salaries" is paid to the Central Government by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in section 200 of the Companies Act, 1956 3 (1 of 1956)], the tax so paid by the employer for a period not exceeding twenty-four months next following the expiry of the first mentioned twenty-four months; 4[(11)where such services commence from a date after the 31st day of March, 1988 5 [but before the 1st day of April, 1993], and tax on his income chargeable under the head "Salaries" is paid to the Central Government by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in section 200 of the Companies Act, 19566 (1 of 1956)], the tax so paid by the employer for a period not exceeding forty-eight months commencing from the date of his arrival in India: 7[Omitted by the Finance Act, 1992, w.e.f 1-6-1992.]] --------------------------------------------------------------------- 1 Substituted for '(A) such remuneration due to or received by him' by the Finance Act, 1988, w.e.f. 1-4-1988. 3 Ibid. 4 Substituted for 'Provided that' by the Finance Act, 1988, w.e.f 1-4-1988. 5 Inserted by the Finance Act, 1993, w.e.f. 1-4-1993. 7 Prior to the omission, the proviso, as inserted by the Finance Act, 1988, w.e.f. 1-4-1988, read as under: "Provided that nothing in this item shall relate to a period exceeding twenty-four months commencing from the date of his arrival in India if the approval of the Central Government for his employment in India for such period is not obtained before the 1st day of October of the relevant assessment year:" --------------------------------------------------------------------- 1.77 1[Provided [* * *] that the Central Government may, if it considers it necessary or expedient in the public interest so to do, waive the 3[condition relating to non-residence in India as specified in] this sub-clause in the case of any individual who is employed in India for designing, erection or commissioning of machinery or plant or supervising activities connected with such designing, erection or commissioning.] Explanation.-For the purposes of this sub-clause, "technician" means a person having specialised knowledge and experience in- (i) constructional or manufacturing operations, or in mining or in the generation of electricity or any other form of power, or (ii) agriculture, animal husbandry, dairy farming, deep sea fishing or ship building, 4[or] 5[(iii)such other field6 as the Central Government may, having regard to the availability of Indians having specialised knowledge and experience therein, the needs of the country and other relevant circumstances, by notification in the Official Gazette, specify,] who is employed in India in a capacity in which such specialised knowledge and experience are actually utilised;] (viii) any income chargeable under the head "Salaries" received by or due to any such individual being a non- resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year; 7[(ix) "any income chargeable under the head "Salaries" received by or due to him during the thirty-six months commencing from the date of his arrival in India for service rendered as a professor or other teacher in a University or other educational institution, and where any such individual continues to remain in employment in India after the expiry of the thirty-six months aforesaid and the tax on his income chargeable under the head "Salaries" is paid by the University or other educational institution concerned to the ---------------------------------------------------------------------- 1 Inserted by the Direct Taxes (Amendment) Act, 1974, w.r.e.f. 1-4- 1973. 2 The word 'further' omitted by the Finance Act, 1992, w.e.f. 1-6- 1992. Earlier, it was Inserted by the Finance Act, 1988, w.e.f. 1-4- 1988. 3 Substituted for 'condition specified in item (1) of by the Finance Act, 1992, w.e.f. 1-6-1992. 4 Inserted by the Finance Act, 1979, w.e.f. 1-6-1979. 5 Ibid. 6 The fields of 'grading and evaluation of diamonds for diamond export or import trade'; 'cookery' 'information technology including computer architecture systems platforms and associated technology, software development process and tools' have been notified: 7 Inserted by the Finance Act, 1964, w.e.f. 1-4-1964. ---------------------------------------------------------------------- 1.78 Central Government, the tax so paid for a period not exceeding twenty-four months following the expiry of the thirty-six months aforesaid, provided in either case the following conditions are fulfilled, namely:- (i) such individual was not resident in any of the four financial years immediately preceding the financial year in which he arrived in India; and (ii) his contract of service is approved by the Central Government- (a) on or before the 1st day of October, 1964, in the case of a professor or other teacher whose service commenced before the 1st day of April, 1964; (b) before the commencement of his service or within one year of such commencement, in any other case;] 1[(x) 'any sum due to or received by him, during the twenty- four months commencing from the date of his arrival in India, for undertaking any research work in India, provided the following conditions are fulfilled, namely:- (a) the research work is undertaken in connection with a research scheme approved in this behalf by the Central Government on or before the 1st day of October of the relevant assessment year; and (b) such sum is payable or paid directly or indirectly by the Government of a foreign State or any institution or association or other body established outside India;] 3[(xi) the remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,- (i) the Government; or (ii) any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments; or (iii) any company which is a subsidiary of a company refer-red to in item (ii); or (iv) any corporation established by or under a Central, State or Provincial Act; or (v) any society registered under the Societies Registration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Central Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments;] ----------------------------------------------------------------------- 1 Inserted by the Finance Act, 1964, w.e.f. 1-4-1964. 3 Inserted by the Finance Act, 1976, w.e.f. 1-4-1976. ----------------------------------------------------------------------- 1.79 1[(6A) 2 where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 3[and,- ---------------------------------------------------------------------- 1 Inserted by the Finance Act, 1983, 3 Substituted for the following by the Finance Act, 1992, w.e.f. 1- 6-1992: "and approved by the Central Government, the tax on such income is payable, under the terms of such agreement, by Government or the Indian concern to the Central Government, the tax so paid;" ----------------------------------------------------------------------- 1.81 (a) where the agreement relates to a matter included in the industrial policy, for the time being in force,. of the Government of India, such agreement is in accordance with that policy; and (b) in any other case, the agreement is approved by the Central Government, the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid.) Explanation.-For the purposes of this clause 1[and clause (6B)],- (a) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (b) "foreign company" shall have the same meaning as in section 80B; (c) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] 2[(6B) where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into by the Central Government with the Government of a foreign State or an international Organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved by the Central Government, the tax so paid;] 3[(6C ) 4 any income arising to such foreign company, as the Central Government may, by notification in the Official Gazette, specify in this behalf, by way of fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India;] (7) any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India; (8) in the case of an individual who is assigned to, duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)- (a) the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and (b) any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State; ---------------------------------------------------------------------- 1 Inserted by the Finance Act, 1988, w.e.f. 1-4-1988. 2 Ibid. 3 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. ----------------------------------------------------------------------- 1.82 1[(8A) in the case of a consultant- (a) any remuneration or fee received by him or it, directly or indirectly, out of the funds made available to an international Organisation [hereafter referred to in this clause and clause (8B) as the agency] under a technical assistance grant agreement between the agency and the Government of a foreign State; and (b) any other income which accrues or arises to him or it outside India, and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay any income or social security tax to the Government of the country of his or its origin. Explanation.-In this clause, "consultant" means- (i) any individual, who is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India, or (ii) any other person, being a non-resident, engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project, provided the following conditions are fulfilled, namely:- (1) the technical assistance is in accordance with an agreement entered into by the Central Government and the agency; and (2) the agreement relating to the engagement of the consultant is approved by the prescribed authority2 for the purposes of this clause; (8B) in the case of an individual who is assigned to duties in India in connection with any technical assistance programme and project in accordance with an agreement entered into by the Central Government and the agency- (a) the remuneration received by him, directly or indirectly, for such duties from any consultant referred to in clause (8A); and (b) any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the country of his origin, provided the following conditions are fulfilled namely:- (i) the individual is an employee of the consultant referred to in clause (8A) and is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India; and (ii) the contract of service of such individual is approved by the prescribed authority' before the commencement of his service;] (9) the income of any member of the family of any such individual as is referred to in clause (8 ) 4 [or clause (8A) or, as the case may be, clause (8B)] accompanying him to India, which accrues or arises outside India, and is not deemed to accrue or, arise in India, in respect of which such --------------------------------------------------------------------- 1 Inserted by the Finance (No. 2) Act, 1991, w.e.f 1-4-1991. 2 Additional Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, in concurrence with Member (Income-tax) of the Board: 3 Ibid. 4 Inserted by the Finance (No. 2) Act, 1991, w.e.f 1-4-1991. -------------------------------------------------------------------- 1.83 member is required to pay any income or social security tax to the Government of that foreign State 1[or, as the case may be, country of origin of such member]; 2[(10)(i) any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services; (ii) any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 43 of that Act; (iii) 4 any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependents on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service, 5[calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government]: Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause 6[shall not exceed the limit so specified]: ---------------------------------------------------------------------- 1 Inserted by the Finance (No. 2) Act, 1991, w.e.f 1-4-1991. 2 Substituted by the Finance Act, 1974, w.e.f. 1-4-1975. Earlier, it was amended by the Finance Act, 1972, w.e.f. 1-4-1973 and the Finance Act, 1974 itself w.r.e.f. 1-6-1972/ 1-4-1962. 5 Substituted for 'calculated on the basis of the average salary for the three years immediately preceding the year in which the gratuity is paid, subject to a maximum of thirty-six thousand rupees or twenty months' salary so calculated, whichever is less' by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. The italicised words were substituted for 'thirty thousand' by the Finance Act, 1983, w.r.e.f. 1-4-1982. 6 Substituted for 'shall not exceed thirty-six thousand rupees" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. The italicised words were substituted for "thirty thousand' by the Finance Act, 1983, w.r.e.f. 1-4-1982. 1.84 Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause 1[shall not exceed the limit so specified] as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years: 2[* * *] Explanation.-3[In this clause and in clause (IOAA)], "salary" shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;] ---------------------------------------------------------------------- 1 Substituted for 'shall not exceed thirty-six thousand rupees' by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. The italicised words were substituted for 'thirty thousand" by the Finance Act, 1983, w.r.e.f. 1-4-1982. 2 Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4- 1989. Prior to the omission, the third and fourth provisos, as amended by the Finance Act, 1983, w.r.e.f. read as under: "Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub- clause (i) increase, by notification in the Official Gazette, the limit of thirty-six thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provisions of this clause, up to such maximum amount: Provided also that in relation to cases in which the event (that is to say retirement of the employee or his becoming incapacitated or termination of his employment or his death, as the case may be) on which gratuity is received had taken place before the 31st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this clause shall have effect as if for the words "thirty six thousand rupees", at the three places where they occur, the words "thirty thousand rupees" had been substituted." 3 Substituted for "In this clause' by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. ---------------------------------------------------------------------- 1.85 3. All the three limits specified in the section will operate as cumulative conditions and the exempt portion of the gratuity will be restricted to any of these three limits whichever is the least. Retirement gratuity will be exempt to the extent mentioned in the latter half of the section and the remaining amount will be entitled to relief under section 89(1). In the case of gratuity funds approved for the purposes of Income-tax Act a provision authorising the payment of gratuity to an employee while he continues to remain in service should not be allowed. The latter half of the section should be regarded as covering the case of only a gratuity payment on the employee's retirement or on his becoming incapacitated or on termination of his employment or on his death. The rules of a fund approved for the purposes of Income tax Act should not permit the payment of gratuity in the form of annuities payable over a specified number of years. In order to claim the exemption under the section it is necessary that the amount of gratuity should be calculated exactly on the basis laid down in the section. [Letter No. 1 (1 79)162, dated 13th December, 1962] 4. The expression 'termination of employment used in the section as amended by Finance Act, 1972 covers the case of an employee whose services come to an end due to his resignation. 5. Limit of exemption of death-cum-retirement gratuity under section 10(10)(iii) has been raised to Rs. 1 lakh in relation to employees who retire of become incapacitated or die on or after 1st April, 1988 or whose employment is terminated on or after that date. 1[(10A)(i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable 2[to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India- services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act; (ii)any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed- (a) in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and (b) in any other case, the commuted value of one-half of such pension, such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality; --------------------------------------------------------------------- 2 Substituted for 'to the members of the Defence Services or to the employees of a State Government, a local authority' by the Finance Act, 1974, w.r.e.f. 1-4-1962. ---------------------------------------------------------------------- 1.86 1[* * *] 2[(10AA)(i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement 3[whether] on superannuation or otherwise; (ii) any payment of the nature refer-red to in sub-clause (i) received by .an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement 4 [whether] on superannuation or otherwise as does not exceed 5[eight] months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement 6[whether] on superannuation or otherwise, 7[subject to such limit" as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government]: Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause 9[shall not exceed the limit so specified]: ---------------------------------------------------------------------- 1 Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4- 1989. Prior to the omission, the proviso read as under: "Provided that the maximum limit of payment specified in sub- clause (ii)(a) or subclause (ii)(b) shall not apply in respect of any such payment made before the 19th day of August, 1965;" 2 Inserted by the Finance Act, 1982, w.r.e.f. 1-4-1978. 3 Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1978. 4 Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1978. 5 Substituted for 'six' by the Direct Tax Laws (Amendment) Act, 1987, w.r.e.f. 1-7-1986. 6 Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1978. 7 Substituted for 'or thirty thousand rupees, whichever is less' by the Direct Tax Laws (Amendment) Act, 1987, w.r.e.f. 1-7-1986. 9 Substituted for shall not exceed thirty thousand rupees' by the Direct Tax Laws (Amendment) Act, 1987, w.r.e.f. 1-7-1986. ----------------------------------------------------------------------- 1.87 Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause 1[shall not exceed the limit so specified) as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years: 2[* * *] Explanation.-For the purposes of sub-clause (ii),- 3[* * *] the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired; 4[* * *] 5[(10B) any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise , 6 [at the time of his retrenchment: Provided that the amount exempt under this clause shall not exceed- (i) an amount calculated in accordance with the provisions of clause (b)of section 25F of the Industrial Disputes Act, 19477 (14 of 1947); or --------------------------------------------------------------------- 1 Substituted for 'shall not exceed thirty thousand rupees' by the Direct Tax Laws (Amendment) Act, 1987, w.r.e.f. 1-7-1986. 2 Omitted, ibid. Prior to the omission, the third and fourth provisos, as amended by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1978, read as under: "Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub- clause (i), increase, by notification in the Official Gazette, the limit of thirty thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provisions of this sub-clause, up to such maximum amount: Provided also that in relation to an employee retiring whether on superannuation or otherwise before the 1st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this sub-clause shall have effect as if for the words "thirty thousand rupees", at the three places where they occur, the words "twenty-five thousand five hundred rupees" had been substituted.' 3 "(i)" omitted by the Direct Tax Laws (Amendment) Act, 1987, w.r.e.f. 1-7-1986. 4 Omitted, ibid. Prior to the omission, clause (ii) read as under: "(ii) 'salary' shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;" 5 Inserted by the Finance Act, 1975, w.e.f. 1-4-1976. 6 Substituted for the following by the Finance Act, 1985, w.e.f. 1- 4-1986: "at the time of his retrenchment, to the extent such compensation does not exceed- (i) an amount calculated in accordance with the provisions of clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947); or (ii) twenty thousand rupees, whichever is less." ----------------------------------------------------------------------- 1.88 1[(ii) such amount, not being less than fifty thousand rupees, as the Central Government may, by notification in the Official Gazette, specify in this behalf,] whichever is less: Provided further that the preceding proviso shall not apply in respect of any compensation received by a workman in accordance with any scheme which the Central Government may, having regard to the need for extending special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in this behalf.) Explanation.-For the purposes of this clause- (a) compensation received by a workman at the time of the closing down of the undertaking in which he is employed shall be deemed to be compensation received at the time of his retrenchment; (b) compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is employed from the employer in relation to that undertaking to a new employer, shall be deemed to be compensation received at the time of his retrenchment if- (i)the service of the workman has been interrupted by such transfer; or (ii)the terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before the transfer; or (iii)the new employer, is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer; (c) the expressions "employer" and "workman" shall have the same meanings as in the Industrial Disputes Act, 1947 2 (14 of 1947);] 3[(10BB) any payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (21 of 1985) and any scheme framed thereunder except payment made to any assessee in connection with the Bhopal gas leak disaster to the extent such assessee has been allowed a deduction under this Act on account of any loss or damage caused to him by such disaster;] ---------------------------------------------------------------------- 1. Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1- 4-1989. Prior to the substitution, clause (ii) read as under. "(ii) fifty thousand rupees," 3 Inserted by the Finance Act, 1992, w.e.f. 14-1992. --------------------------------------------------------------------- 1.89 1[(10C) any amount received by an employee of- (i)a public sector company; or (ii)any other company; or (iii)an authority established under a Central, State or Provincial Act; or (iv)a local authority; 2[or] 3[(v) a co-operative society,- or (vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 4 (3 of 1956); or (vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 5 (59 of 1961); or (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify6 in this behalf,] at the time of his voluntary retirement in accordance with any scheme or schemes of voluntary retirement, to the extent such amount does not exceed five lakh rupees: Provided that the schemes of the said companies or authorities 7 [or societies or Universities or the Institutes referred to in sub- clauses (vii) and (viii)], as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of ---------------------------------------------------------------------- 1 Substituted by the Finance Act, 1993, w.e.f. 1-4-1993. Prior to the substitution, clause (10C), as inserted by the Finance Act, 1987, w.e.f. 1-4-1987, read as under: "(10C) any payment received by an employee of a public sector company at the time of his voluntary retirement in accordance with any scheme which the Central Government may, having regard to the economic viability of such company and other relevant circumstances, approve in this behalf;" The following clause (10C) was substituted by the Finance Act, 1992, w.e.f. 1-4-1993 but it has been substituted again, as above, without coming into operation: "(10C) any amount received by an employee of a public sector company or of any other company at the time of his voluntary retirement in accordance with any scheme or schemes of voluntary retirement: Provided that the schemes of the said companies governing the payment of such amount are framed in accordance with such guidelines as may be prescribed for the public sector companies or for other companies and such guidelines may, inter alia, include criteria of economic viability and such schemes in relation to companies (other than public sector companies) are approved by the Chief Commissioner or, as the case may be, Director-General in this behalf;" 2 Inserted by the Finance Act, 1994, w.e.f. 1-4-1995. 3 Ibid. 6 The Indian Institutes of Management at Ahmedabad, Bangalore, Calcutta and Lucknow have been notified. 7 Inserted by the Finance Act, 1994, w.e.f. 1-4-1995. ----------------------------------------------------------------------- 1.90 economic viability) as may be prescribed' and such schemes in relation to companies, referred to in sub-clause (ii) 2 [or co-operative societies referred to in sub-clause (v)] are approved by the Chief Commissioner or, as the case may be, Director-General in this behalf: Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year;] 3[(10D) any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy 4 [other than any sum received under sub-section (3) of section 8ODDA];] (11)any payment from a provident fund to which the Provident Funds Act, 1925 5 (19 of 1925), applies 6[or from any other provident fund set up by the Central Government and notified7 by it in this behalf in the Official Gazette]; (12)the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule; 8[(13) any payment from an approved superannuation fund made- (i) on the death of a beneficiary; or (ii) to any employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or (iii) by way of refund of contributions on the death of a beneficiary; or (iv) by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon;] 9[(13A) any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by ----------------------------------------------------------------- 2 Inserted by the Finance Act, 1994, w.e.f. 1-4-1995. 3 Inserted by the Finance (No. 2) Act, 1991 w.r.e.f. 1-4-1962. 4 Being inserted by the Finance Act, 1995, w.e.f. 1-4-1996. 6 Inserted by the Finance Act, 1968, w.e.f. 1-4-1969. 7 Public Provident Fund, Scheme, 1968 has been notified under this clause: 8 Substituted by the Finance Act, 1965, w.r.e.f. 1-4-1962. 9 Inserted by the Direct Taxes (Amendment) Act, 1964, w.e.f. 6-10- 1964. ---------------------------------------------------------------------- 1.91 whatever name called) in respect of residential accommodation occupied by the assessee, to such extent 1[* * *] as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.] 2[Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where- (a) the residential accommodation occupied by the assessee is owned by him; or (b) the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him;] 3[(14)(i) 4 any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively ---------------------------------------------------------------------- 1 The words '(not exceeding four hundred rupees per month)' omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Earlier, 'four' was substituted for 'three' by the Finance Act, 1975, w.e.f. 1-4-1975. 2 Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1976. 3 Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to the substitution, clause (14), as amended by the Finance Act, 1975, w.r.e.f. 1-4-1962, read as under: "(14) any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose. Explanation.-For the removal of doubts, it is hereby declared that any allowance granted to the assessee to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides shall not be regarded, for the purposes of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties." ---------------------------------------------------------------------- 1.92 incurred in the performance of the duties of an office or employment of profit, 1[as may be prescribed], to the extent to which such expenses are actually incurred for that purpose; (ii)any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, 3[as may be prescribed and to the extent as may be prescribed:] 4[Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence;] 5[(14A) any income received by a public financial institution as exchange risk premium from any person borrowing foreign currency from such institution, provided the amount of such premium is credited by such institution to a fund specified under clause (23E). Explanation.-For the purposes of this clause,- (i) the expression "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 6 (1 of 1956); (ii) the expression "exchange risk premium" means a premium paid by a person borrowing foreign currency from a public financial institution to cover the risk which may be borne by such institution on account of fluctuations in exchange rate of foreign currencies borrowed by such institution;] (15) 7[(i) income by way of interest, premium on redemption or other --------------------------------------------------------------------- 1 Substituted for 'as the Central Government may, by notification in the Official Gazette, specify' by the Finance Act, 1995, w.e.f. 1-7-199.5. 3 Substituted for "as the Central Government may, by notification in the Official Gazette, specify, to the extent specified in the notification" by the Finance Act, 1995, w.e.f. 1-7-1995. 4 Inserted by the Direct Tax Laws (Second Amendment) Act, 1989 w.r.e.f. 1-4-1989. 5 Inserted by the, Finance Act, 1989, w.e.f. 1-4-1989. 7 Substituted for sub-clauses (i), (ia), (ib), (ii) and (iia) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to the substitution, sub-clause (ia), as inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965; sub-clause (ib), as inserted by the Special Bearer Bonds (Immunities & Exemptions) Act, 1981, w.e.f. 12-1-1981; sub-clause (ii), as amended by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965, the Finance Act, 1979, w.e.f. 1-4-1980 and the Finance Act, 1987, w.r.e.f. 1-4-1983; and sub-clause (iia), as inserted by the Finance Act, 1968, w.e.f. 1-4-1969, read as under: "(i) monthly payment on the 15-Year Annuity Certificates issued by or under the authority of the Central Government or such other annuity certificates issued by or under the authority of that Government as that Government may, by notification in the Official Gazette, specify in this behalf, to the extent to which the amounts of the certificates do not exceed in each case the ---------------------------------------------------------------------- 1.93 payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification' in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification;] 2 [(iib ) 3 (in the case of an individual or a Hindu undivided family,] interest on such Capital Investment Bonds4 as the Central Government may, by notification in the Official Gazette, specify in this behalf;] 5[(iic) in the case of an individual or a Hindu undivided family, interest on such Relief Bonds as the Central Government may, by notification in the Official Gazette, specify6 in this behalf;] 7[(iid) interest on such bonds, as the Central Government may, by notifications in the Official Gazette, specify, arising to- (a) a non-resident Indian, being an individual owning the bonds, or (b) any individual owning the bonds by virtue of being a nominee or survivor of the non-resident Indian; or ---------------------------------------------------------------------- -> -> maximum amount which is permitted to be invested therein; (ia) annual payment on National Defence Gold Bonds, 1980; (ib) premium on the redemption of Special Bearer Bonds, 1991; (ii) interest on Treasury Savings- Deposit Certificates, Post Office Cash Certificates, Post Office National Savings Certificates, National Plan Certificates, Twelve-Year National Plan Savings Certificates and such other certificates, issued by the Central. Government as that Government may, by notification in the Official Gazette, specify in this behalf, interest on deposits in Post Office Savings Bank and bonus in respect of deposits under the Post Office Cumulative Time Deposits Rules, 1981, to the extent to which the amounts of such certificates or deposits do not exceed in each case the maximum amount which is permitted to be invested or deposited therein: Provided that where in the case of an assessee the interest on deposits in a Public Account of the nature referred to in item (6) in the Table below rule 4 of the Post Office Savings Account Rules, 1981, exceeds two thousand two hundred and fifty rupees, the amount of interest on such deposits that shall not be included in the total income of the assessee under this sub-clause shall be two thousand two hundred and fifty rupees; (iia) interest on fixed deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette, to the extent to which the amounts of such deposits do not exceed, in each case, the maximum amount which is permitted to be deposited therein." 2 Inserted by the Finance Act, 1982, w.e.f. 1-4-1983. 3 Inserted by the Finance Act, 1983, w.e.f. 1-4-1983. 5 Inserted by the Finance Act, 1988, w.e.f. 1-4-1989. 6 The 9