Computation of Total Income

14. Method for determining amount of expenditure in relation to income not includible in total income.–(1) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts:— (a) the amount of expenditure directly relating to income which does not form part of total income; and (b) an amount equal to 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income. (2) The amounts referred to in sub-rule (1) shall not exceed the total expenditure claimed by the assessee.

15. Valuation of perquisites.–(1) For the purpose of computing the income chargeable under the head "Salaries", the value of perquisites provided by the employer, either directly or indirectly, to the assessee (herein referred to as the employee) or to any member of his household by reason of his employment, shall be determined in accordance with the provisions of this rule. (2) (a) The value of residential accommodation provided by the employer, for the purpose of section 17(1)(a) and (b), during the tax year, in the circumstances referred in column B of the following Table I, shall be determined in accordance with the column C or column D thereof, as the case may be: Table I Sl. Circumstances Where accommodation is Where accommodation is No. unfurnished furnished A B C D (1) Where the accommodation is License fee determined by the Central Value of perquisite is provided by the Central Government Government or any State Government determined as per the or any State Government, to the in respect of accommodation in provisions of sub-rule (2)(e). employees either holding office or accordance with the rules framed by post in connection with the affairs of such Government as reduced by the the Union or of such State. rent actually paid by the employee. (2) Where the accommodation is provided by any other employer and— (a) where the accommodation is (i) 10% of salary in cities having Value of perquisite is owned by the employer; or population exceeding forty determined as per the lakhs as per 2011 census in provisions of sub-rule (2)(e). respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee; (ii) 7.5% of salary in cities having population exceeding fifteen lakhs but not exceeding forty lakhs as per 2011 census in respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee; and (iii) 5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee. (b) where the accommodation is Actual amount of lease rental paid or Value of perquisite is taken on lease or rent by the payable by the employer or 10% of determined as per the employer. salary, in respect of the period during provisions of sub-rule (2)(e). which the said accommodation was occupied by the employee during the tax year, whichever is lower, as reduced by the rent, if any, actually paid by the employee. (3) Where the accommodation is Not applicable. Actual charges paid or payable provided by the employer specified to such hotel or 24% of salary in serial number (1) or (2) in a hotel paid or payable for the tax (except where the employee is year for the period during provided such accommodation for a which such accommodation is period not exceeding in aggregate provided, whichever is lower, fifteen days on his transfer from one as reduced by the rent, if any, place to another). actually paid or payable by the employee. (b) The provisions of this sub-rule shall not apply to any accommodation temporarily provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site; which — (i) having plinth area not exceeding 1000 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or (ii) is located in a remote area. (c) Where on account of his transfer from one place to another, the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to Table I for a period not exceeding ninety days and thereafter the value of perquisite shall be charged for both such accommodations as provided in the said Table I. (d) Where the accommodation is owned or taken on lease or rent by the employer and the same accommodation is continued to be provided to the same employee for more than one tax year, the amount calculated in accordance with Table I:Sl. No. 2(a) or (b) shall not exceed the amount so calculated for the first tax year, as multiplied by the amount which is a ratio of the Cost Inflation Index for the tax year for which the amount is calculated and the Cost Inflation Index for the tax year in which the accommodation was initially provided to the employee. (e) For the purposes of this sub-rule, where the accommodation is furnished;– (i) the value of perquisite as determined under Table I: Sl. Nos. 1 and 2. C be increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment), as reduced by any charges paid or payable for the same by the employee during the tax year; and (ii) if such furniture is hired from a third party, the value of perquisite would be the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the tax year. (f) For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee, who is serving on deputation with any body or undertaking under the control of such Government,— (i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and (ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Table 1: Sl. No. 2(a), as if the accommodation is owned by the employer. (g) For the purposes of clause (d); (i) "Cost Inflation Index" means the index as may be notified by the Central Government under section 72(8)(a); (ii) "first tax year" means the tax year 2023-2024, or the tax year in which the accommodation was provided to the employee, whichever is later. (3)(a) The value of perquisite by way of use of motor car to an employee by an employer, in the circumstances as referred in column B of the following Table II, shall be determined in accordance with column C or column D thereof, as the case may be: Table II VALUE OF PERQUISITE PER CALENDAR MONTH Sl. Circumstances Where cubic capacity of Where cubic capacity of engine No. engine does not exceed 1.6 exceeds 1.6 litres litres or the motor car is an electric vehicle A B C D (1) Where the motor car is owned or hired by the employer and— (a) is used wholly and exclusively no value, if the documents no value, if the documents in the performance of his specified in sub-rule (3)(c) specified in sub-rule (3)(c) are official duties; are maintained by the maintained by the employer; employer (b) is used exclusively for the actual amount of expenditure actual amount of expenditure private or personal purposes of incurred by the employer on incurred by the employer on the the employee or any member of the running and maintenance running and maintenance of his household and the running of motor car during the motor car during the relevant tax and maintenance expenses are relevant tax year including year including remuneration, if met or reimbursed by the remuneration, if any, paid by any, paid by the employer to the employer; the employer to the chauffeur chauffeur as increased by the as increased by the amount amount representing normal wear representing normal wear and tear of the motor car and as and tear of the motor car and reduced by an amount charged as reduced by any amount from the employee for such use. charged from the employee for such use. (c) is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and— (i) the expenses on ₹ 5000 (plus ₹3000, if ₹ 7000 (plus ₹3000, if chauffeur maintenance and chauffeur is also provided to is also provided to run the motor running are met or run the motor car by the car by the employer); reimbursed by the employer) employer; (ii) the expenses on running ₹ 2000 (plus ₹ 3000, if ₹ 3000 (plus ₹3000, if chauffeur and maintenance for chauffeur is also provided by is also provided to run the motor private or personal use the employer to run the car by the employer). are fully met by the motor car by the employer). assessee; (2) Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and— (a) such reimbursement is for the no value, if the documents no value, if the documents use of the vehicle wholly and specified in sub-rule (3)(c) specified in sub-rule (3)(c) are exclusively for official are maintained by the maintained by the employer; purposes; employer (b) such reimbursement is for the the actual amount of the actual amount of expenditure use of the vehicle partly for expenditure incurred by the incurred by the employer as official purposes and partly for employer as reduced by the reduced by the amount specified personal or private purposes of amount specified in Sl. No. in Sl. No. (1)(c)(i) above, if the the employee or any member of (1)(c)(i) above, if the conditions mentioned in sub-rule his household. conditions mentioned in sub- (3)(c) are fulfilled. rule (3)(c) are fulfilled. (3) Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and (a) such reimbursement is for the no value, if the documents not applicable; use of the vehicle wholly and specified in sub-rule (2)(c) exclusively for official are maintained by the purposes; employer (b) such reimbursement is for the the actual amount of use of vehicle partly for official expenditure incurred by the purposes and partly for employer as reduced by the personal or private purposes of amount of ₹3000 if the the employee. conditions mentioned in sub- rule (3)(c) are fulfilled. (b) Where an employer owns or hires one or more motor cars and allows the employee or any member of his household to use them for the purposes other than wholly and exclusively in the performance of his duties, the value of perquisite shall be the amount calculated as below: (i) for one car, in accordance with Table II: Sl. No. (1)(c)(i) ;and (ii) for other cars, in accordance with Table II: Sl. No. (1)(b). (c) If the employer or employee claims that the motor vehicle is used solely for official duties or that the actual expenses for running and maintaining the employee-owned motor vehicle for official purposes exceed the deductible amounts in Table II: Sl. No. 2(b) or 3(b), he may claim a higher amount for official use and in this case, the value of the perquisite shall be the actual amount of expenses paid or reimbursed by the employer, minus the higher amount attributed to official use of the vehicle provided that the following conditions are fulfilled: — (i) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage and the amount of expenditure incurred thereon; and (ii) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties. (d) For the purposes of this sub-rule, the normal wear and tear of a motor car shall be taken at 10% per annum of the actual cost of the motor car or cars. (4) The value of benefit provided by the employer to the employee or any member of his household for goods, services or utilities, as referred to in column B of the following Table III, shall be computed in accordance with column C thereof: Table III Sl. No. Nature of goods, Value of benefit of the goods, services or utilities provided services or utilities A B C 1. Services of a sweeper, The total amount of salary paid or payable by the employer or any other a gardener, a watchman person on his behalf for such services as reduced by any amount paid by the or a personal attendant. employee for such services. 2 (a) Supply of gas, The amount paid by the employer to the agency supplying the gas, electric electric energy or water energy or water, as reduced by any amount paid by the employee in respect of for the consumption of such services. the employee‘s household by purchasing them from any outside agency. (b) Supply of gas, The amount of the manufacturing cost per unit incurred by the employer, as electric energy or water reduced by any amount paid by the employee in respect of such services. for the consumption of the employee‘s household made from resources owned by the employer, without purchasing them from any outside agency 3 (a) Provision of free or The amount of expenditure incurred by the employer in this regard, as reduced concessional by any amount paid or recovered from the employee on that account. educational facilities for any member of the employee‘s household. (b) Provision of free or Cost of such education in a similar institution in or near the locality, as concessional reduced by any amount paid or recovered from the employee on that account, educational facilities where the cost of such education or value of such benefit per child exceeds for any member of ₹3,000 per month. employee household, where the educational institution is itself maintained and owned by the employer. (c) Provision of free Cost of such education in a similar institution in or near the locality, as educational facilities reduced by any amount paid or recovered from the employee on that account, for any member of where the cost of such education or value of such benefit per child exceeds employees' household ₹3,000 per month. in any other educational institution by reason of his employment. 4. Provision by an Value at which such benefit or amenity is offered by such employer to the employer who is public as reduced by the amount, if any, paid by or recovered from the engaged in the carriage employee for such benefit or amenity. of passengers or goods, to any employee (not being an employee of an airline or the railways) or to any member of his household, for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods. (5)(a) In terms of provisions contained in section 17(1)(e), the value of other benefits or amenities of the nature referred to in Column B of the following Table IV shall be determined in accordance with column C and subject to conditions provided in Column D thereof: Table IV Sl. Nature of other Value of Conditions No. benefits or perquisite amenities A B C D 1. Benefit from the It shall be the sum (a) No value would be charged if such loans are made available provision of equal to the for medical treatment in respect of diseases specified in rule interest-free or interest computed 18 or where the amount of loans is not exceeding ₹2,00,000 concessional loan at the annual rate in the aggregate; and for any purpose charged by the made available to State Bank of (b)where the benefit relates to the loans made available for the employee or any India, constituted medical treatment referred to in clause (a), the exemption member of his under the State so provided shall not apply to so much of the loan as has household during Bank of India Act, been reimbursed to the employee under any medical the relevant tax year 1955 (23 of 1955), insurance scheme. by the employer or as on the 1st day any person on his of the relevant tax behalf. year in respect of loans by the bank for the same purpose, using the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household. 2. The value of It shall be the sum (a) Where such facility is maintained by the employer, and is travelling, touring, equal to the not available uniformly to all employees, the value of benefit accommodation and amount of the shall be taken to be the value at which such facilities are any other expenses expenditure offered by other agencies to the public; or paid for or borne or incurred by such (b) where the employee is on official tour and the expenses are reimbursed by the employer in that incurred in respect of any member of his household employer for any behalf. accompanying him, the amount of expenditure so incurred holiday availed of shall be an amenity; or by the employee or (c) where any official tour is extended as a vacation, the value any member of his of such fringe benefit shall be limited to the expenses household, other incurred in relation to such extended period of stay or than concession or vacation as reduced by the amount, if any, paid or recovered assistance referred from the employee for such benefit or amenity. to in rule 277. 3. The value of free It shall be the This provision shall not apply to food and non- amount of alcoholic beverages expenditure (a) free food and non-alcoholic beverages provided by such provided by the incurred by such employer during working hours at office or business premises employer to an employer as or through paid vouchers usable only at eating joints, to the employee. reduced by the extent the value thereof in either case does not exceed ₹200 amount, if any, per meal; or paid or recovered (b) tea or snacks provided during working hours; or from the employee (c) free food and non-alcoholic beverages during working for such benefit or hours provided in a remote area or an off-shore installation. amenity. 4. The value of any It shall be the sum It shall be ‗nil‘, if the value of such gift, voucher or token, as gift, or voucher, or equal to the the case may be, is below ₹ 15,000 in aggregate during the token (in lieu of amount of such tax year. gift) received by the gift. employee or by member of his household) on ceremonial occasions or otherwise from the employer. 5. The amount of It shall be the There shall be no value of such benefit, where expenses are expenses including amount taken to incurred wholly and exclusively for official purposes and the membership fees be the value of conditions specified in sub-rule (5)(b) are fulfilled. and annual fees perquisite incurred by the chargeable to tax employee or any as reduced by the member of his amount, if any household, which is paid or recovered charged to a credit from the employee card (including any for such benefit or add-on-card) amenity. provided by the employer, or otherwise, paid for or reimbursed by such employer. 6. The value of benefit It shall be (a) Where the employer has obtained corporate membership of to the employee determined to be the club and the facility is enjoyed by the employee or any resulting from the the actual amount member of his household, the value of perquisite shall not payment or of expenditure include the initial fee paid for acquiring such corporate reimbursement by incurred or membership; and the employer of any reimbursed by (b) the provision given in column C of Sl. No. 6 shall not expenditure incurred such employer on apply, if such expenditure is incurred wholly and exclusively (including the that account and for business purposes and the following conditions are amount of annual or the amount so fulfilled:– periodical fee) in a determined shall (i) conditions in sub-rule (5)(b) are fulfilled; and club by him or by a be reduced by the (ii) use of health club, sports and similar facilities are provided member of his amount, if any uniformly to all employees by the employer. household. paid or recovered from the employee for such benefit or amenity. 7. The value of benefit It shall be to the employee determined at resulting from the 10% per annum use by the employee of the actual cost or any member of of such asset or his household of any the amount of rent movable asset (other or charge paid or than assets already payable by the specified in this rule employer, as the and other than case may be, as laptops, computers, reduced by the tablets and mobile amount, if any, phones) belonging paid or recovered to the employer or from the employee hired by him. for such use. 8. The value of benefit It shall be The cost of normal wear and tear shall be calculated at the rate to the employee determined to be of arising from the the amount (a) 50% in case of computers and electronic items, by transfer of any representing the reducing balance method; movable asset actual cost of such (b) 20% in the case of motor cars, by reducing balance belonging to the assets to the method; and employer directly or employer as (c) 10% in case of other assets, indirectly to the reduced by the employee or any cost of normal of the cost of the asset for each completed year during which member of his wear and tear and such asset was put to use by the employer. household. as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer. 9. The value of any It shall be other benefit or determined on the amenity, service, basis of cost to the right or privilege employer under an provided by the arm's length employer, except transaction as expenses on reduced by the telephones, including employee's a mobile phone. contribution, if any. (b) For the purposes of clause (a) of Table IV: Sl. Nos. 5 and 6 .C, the following conditions need to be satisfied:– (i) complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure and the nature of expenditure; (ii) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties. (6) For the purposes of section 17(1)(d), the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the option is exercised by the employee, shall be determined as follows:– (a) in a case where, on the date of the exercising of the option, the share in the company is listed on a recognised stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange, subject to the provisions of clause (b); (b) in a case where, on the date of exercising of the option, the share is listed on more than one recognised stock exchanges, the fair market value shall be the average of the opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share; (c) in a case where, on the date of exercising of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be— (i) the closing price of the share on any recognised stock exchange on a date closest to the date of exercising of the option and immediately preceding such date; or (ii) the closing price of the share on a recognised stock exchange, which records the highest volume of trading in such share, if the closing price, as on the date closest to the date of exercising of the option and immediately preceding such date, is recorded on more than one recognised stock exchange; (d) in a case where, on the date of exercising of the option, the share in the company is not listed on a recognised stock exchange, the fair market value shall be such value of the share in the company as determined by a merchant banker on the specified date. (7) For the purposes of section 17(1)(d), the fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as may be determined by a merchant banker on the specified date. (8) For the purposes of this rule— (a) "accommodation" includes a house, flat, farm house or part thereof, or accommodation in a hotel, motel, service apartment, guest house, caravan, mobile home, ship or other floating structure; (b) "closing price" of a share on a recognised stock exchange on a date shall be the price of the last settlement on such date on such stock exchange, and where the stock exchange quotes both "buy" and "sell" prices, the closing price shall be the "sell" price of the last settlement; (c) "entertainment" includes hospitality of any kind and also, expenditure on business gifts other than free samples of the employer‘s own product with the aim of advertising to the general public; (d) "hotel" includes licensed accommodation in the nature of motel, service apartment or guest house; (e) "maximum outstanding monthly balance" means the aggregate outstanding balance for each loan as on the last day of each month. (f) "member of household" shall include— (i) spouse; (ii) children and their spouses; (iii) parents; and (iv) servants and dependants; (g) "merchant banker" means category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); (h) "opening price" of a share on a recognised stock exchange on a date shall be the price of the first settlement on such date on such stock exchange and where the stock exchange quotes both "buy" and "sell" prices, the opening price shall be the "sell" price of the first settlement; (i) "recognised stock exchange" shall have the same meaning assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (j) "remote area", specified in sub-rule (1)(b), means any area other than an area which is located— (i) within the local limits of; or (ii) within a distance, measured aerially, of thirty kilometers from the local limits of, any municipality or a cantonment board having a population of one lakh or more based on the 2011 census; (k) "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called, from one or more employers, as the case may be, but does not include the following:— (i) dearness allowance or dearness pay, unless it enters into the computation of superannuation or retirement benefits of the employee concerned; (ii) employer's contribution to the provident fund account of the employee; (iii) allowances, which are exempted from payment of tax; (iv) the value of perquisites specified in section 17(1); (v) any payment or expenditure specifically excluded under section 17(2); and (vi) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments; (l) "specified date" means— (i) the date of exercising of the option; or (ii) any date earlier than the date of the exercising of the option, not being a date which is more than one hundred and eighty days earlier than the date of the exercising.

16. Annual accretion referred to in section 17(1)(i).– (1) For the purposes of section 17(1)(i), annual accretion by way of interest, dividend or any other amount of similar nature during the tax year (herein referred to as the current tax year) to the balance of the credit of the fund or scheme referred to in section 17(1)(h), shall be the amount or aggregate of amounts computed in accordance with the following formula: — TP = (PC/2) × R + (PC1 + TP1) × R Where,– TP = Taxable perquisite under section 17(1)(i) for the current tax year; TP1 = aggregate of taxable perquisite under section 17(1)(i) for the tax year or years commencing on or after the 1st April, 2020 other than the current tax year; PC = aggregate amount of principal contribution made by the employer in excess of ₹ 750000 lakhs to the specified fund or scheme during the tax year; PC1 = aggregate amount of principal contribution made by the employer in excess of ₹ 750000 to the specified fund or scheme for the tax year or years commencing on or after the 1 st April, 2020 other than the current tax year; R = I/ F(avg.); I = aggregate amount of income accrued during the current tax year in the specified fund or scheme account; F(avg.) = aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year plus the aggregate amount of balance to the credit of the specified fund or scheme on the last day of the current tax year, divided by two. (2) For the purposes of this rule,– (a) "specified fund or scheme" means a fund or scheme referred to in section 17(1)(h); (b) where the aggregate amount of TP1 and PC1 exceed the aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year, then the excess amount shall be ignored for the purpose of computing the aggregate amount of TP1 and PC1.

17. Salary income for purposes of section 17(1)(c)(ii).– For the purposes of section 17(1)(c)(ii), the prescribed income under the head "Salaries" shall be ₹ 400000.

18. Exemption of medical benefits from perquisite value in respect of medical treatment of prescribed diseases or ailments in hospitals approved by Chief Commissioner. –(1) In granting approval to any hospital other than a hospital for Indian system of medicine and homeopathic treatment for the purposes of section 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital is registered with the local authority and fulfils the following requirements:— (a) the building used for the hospital complies with the municipal bye-laws in force; (b) the rooms are well ventilated, lighted and are kept in clean and hygienic conditions; (c) at least ten iron spring beds are provided for patients; (d) at least one properly equipped operation theatre is provided, with minimum floor space of one hundred and eighty square feet and with a separate sterilisation room; (e) at least one labour room is provided, with minimum floor space of one hundred and eighty square feet, in case the hospital provides medical service for maternity cases; (f) aseptic conditions are maintained in the operation theatre and the labour room; (g) a duty room is provided for the nursing staff on duty; (h) adequate space for storage of medicines, food articles, equipments and such other articles is provided; (i) the water used in the hospital or nursing home is fit for drinking; (j) adequate arrangements are made for isolating septic and infectious patients; (k) the hospital is provided with and maintains— (i) high pressure sterilizer and instrument sterilizer; (ii) oxygen cylinders and necessary attachments for giving oxygen; (iii) adequate surgical equipments, instruments and apparatus including intravenous apparatus; (iv) a pathological laboratory for testing of blood, urine and stool; (v) electro-cardiogram monitoring system; and (vi) stand-by generator for use in case of power failure; (l) there is at least one qualified doctor available on duty round the clock for every twenty beds or fraction thereof; (m) in hospitals providing intensive care unit facilities, there are at least two qualified doctors available on duty round the clock exclusively for such intensive care unit; (n) one nurse is on duty round the clock for every five beds or a fraction thereof; (o) in hospitals providing intensive care unit facilities, there are at least four nurses provided exclusively for every four beds or fraction thereof for such intensive care unit; and (p) the hospital maintains record of health of every patient containing information about the patient's name, address, occupation, sex, age, date of admission, date of discharge, diagnosis of disease and treatment undertaken. (2) In granting approval to any hospital for Indian system of medicine and homeopathic treatment for the purposes of 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital fulfils the conditions specified in the Office Memorandum dated the 6th June, 2002, issued by the Department of Indian Systems of Medicine and Homeopathy, Ministry of Health and Family Welfare for approval of private hospitals for Indian system of medicine and homeopathic treatment to Central Government Health Scheme beneficiaries and the Central Government employees. (3) For the purposes of section 17(2)(b)(ii), the prescribed diseases or ailments shall be the following:— (a) cancer; (b) tuberculosis; (c) acquired immunity deficiency syndrome; (d) disease or ailment of the heart, blood, lymph glands, bone marrow, respiratory system, central nervous system, urinary system, liver, gall bladder, digestive system, endocrine glands or the skin, requiring surgical operation; (e) ailment or disease of the eye, ear, nose or throat, requiring surgical operation; (f) fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment; (g) gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laparoscopic intervention; (h) ailment or disease of the organs mentioned at (d), requiring medical treatment in a hospital for at least three continuous days; (i) gynaecological or obstetric ailment or disease requiring medical treatment in a hospital for at least three continuous days; (j) burn injuries requiring medical treatment in a hospital for at least three continuous days; (k) mental disorder - neurotic or psychotic - requiring medical treatment in a hospital for at least three continuous days; (l) drug addiction requiring medical treatment in a hospital for at least seven continuous days; and (m) anaphylactic shocks including insulin shocks, drug reactions and other allergic manifestations requiring medical treatment in a hospital for at least three continuous days. (4) For the purposes of this rule,— (a) "nurse" means a person who holds a certificate of a recognised Nursing Council and is registered under any law for the registration of nurses; (b) "qualified doctor" means a person who holds a degree recognised by the Medical Council of India and is registered by the Medical Council of any State; and (c) "surgical operation" includes treatment by modern methodology such as angioplasty, dialysis, lithotripsy, laser or cryo-surgery.

19. Gross total income for purposes of section 17(3)(b).– For the purposes of section 17(3)(b), the prescribed gross total income shall be ₹ 800000.

20. Procedure for purposes of section 19 [Table: Sl.No.12] relating to voluntary retirement or voluntary separation.– (1) Subject to the conditions specified in sub-rules (2) and (3), the amount received at the time of voluntary retirement or voluntary separation can be claimed as deduction for the purposes of section 19 [Table: Sl.No.12] by an employee of— (i) a public sector company; or (ii) any other company; or (iii) an authority established under a Central Act or State Act or Provincial Act; or (iv) a local authority; or (v) a co-operative society; or (vi) a University established or incorporated by or under a Central Act or State Act or Provincial Act, and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (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 (59 of 1961); or (viii) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or (ix) such other institute of management as the Central Government may, by notification, specify in this behalf. (2) The deduction under sub-rule (1) is allowable only if the scheme of voluntary retirement framed by the aforesaid company or authority or co-operative society or University or institute, as the case may be, or if the scheme of voluntary separation framed by a public sector company, (herein referred to as ‗the scheme‘) is in accordance with the following requirements:– (i) the scheme applies to an employee who has completed ten years of service or completed forty years of age; (ii) the scheme applies to all employees (by whatever name called) including workers and executives of a company or of an authority or of a co-operative society, as the case may be, excepting directors of a company or of a co-operative society; (iii) the scheme has been drawn to result in overall reduction in the existing strength of the employees; (iv) the vacancy caused by the voluntary retirement or voluntary separation is not to be filled up; (v) the retiring employee of a company shall not be employed in another company or concern belonging to the same management; and (vi) the amount receivable on account of voluntary retirement or voluntary separation of the employee does not exceed either A or B, where,– A= 3*N*S; B = M*S; and N= Number of completed years of service; M = balance months of service left before the date of his retirement on superannuation; S= salary at the time of retirement. (3) In case an amount is received by an employee of a public sector company under the scheme of voluntary separation framed by such public sector company, the requirement of sub-rule (2)(i) shall not be applicable. (4) In this rule, the expression "salary‖ includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

21. Unrealised rent. — For the purposes of section 21(4), the amount of rent which the owner cannot realise shall be equal to the amount of rent receivable by the assessee but not paid by a tenant of the assessee and so proved to be lost and irrecoverable where, — (a) the tenancy is bona fide; (b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property; (c) the defaulting tenant is not in occupation of any other property of the assessee; and (d) the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be futile.

22. Computation of aggregate average advances for purposes of section 31(1) [Table: Sl. No.1] for deduction for provision of bad and doubtful debt.– (1) For the purposes of section 31(1)[Table: Sl. No. 1], the aggregate average advances made by the rural branches of a scheduled bank shall be determined as follows:– (a) the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the tax year shall be aggregated separately; (b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a); and (c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank. (2) In this rule the expressions, "rural branch" and "scheduled bank" shall have the meanings respectively assigned to them in sections 66(26) and 2(98).

23. Computation of pro rata amount of discount on a zero coupon bond for purpose of section 32(d).– (1) For the purposes of section 32(d), the pro rata amount of discount on a zero coupon bond shall be computed in the following manner:— (a) the period of life of the bond shall be converted into number of calendar months and, for this purpose, where the calendar month in which the bond is issued or the bond matures or is redeemed, contains a part of a calendar month then, — (i) if such part is fifteen days or more than fifteen days, it shall be increased to one calendar month; and (ii) if such part is less than fifteen days, it shall be ignored; (b) the amount of discount shall be divided by the number of calendar months determined in accordance with clause (a); and (c) where one or more than one calendar month out of calendar months determined in accordance with clause (a) is or are included in a tax year, the amount determined in accordance with clause (b) shall be multiplied by the number of calendar months so included and the amount so arrived at shall be taken to be the pro rata amount of discount for that tax year.

24. Notification of infrastructure facility for the purposes of section 32(e).– The following conditions shall be fulfilled by a public facility to be eligible to be notified as an infrastructure facility under section 32(e):— (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central Act or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for — (i) developing; or (ii) operating and maintaining or; (iii) developing, operating and maintaining a new infrastructure facility similar in nature to an infrastructure facility referred to in the Explanation to section 80-IA (4)(i) of the Income Tax Act, 1961 (43 of 1961), as it existed prior to its repeal; and (c) it has started or starts operating and maintaining such infrastructure facility on or after the 1st April, 1995.

25. Depreciation.– (1) Subject to the provisions of sub-rule (7), the allowance under section 33(3), in respect of depreciation of any block of assets specified in column (2) of the Table in Appendix I shall be calculated at the percentages specified in the column (3) of the said Table on the written down value of such block of assets as are used for the purposes of the business or profession of the assessee at any time during the tax year. (2) The allowance under section 33(3) in respect of depreciation of any block of assets with respect to the persons mentioned in Column B of the following Table shall not exceed 40% of the written down value of such block of assets, if conditions mentioned in column C thereof are fulfilled:— Table Sl. Person Conditions to be fulfilled No. A B C 1. Domestic company Which has exercised option under– (a) section 199(3); or (b) section 200(5); or (c) section 201(2). 2. (a) Individual or Whose income is chargeable to tax under section Hindu undivided family; or 202(1). (b) association of persons or a body of individuals, whether incorporated or not; or (c) artificial juridical person referred to in section 2(77)(g). 3. Cooperative society resident in India Which has exercised option under– (a) section 203(5); or (b) section 204(2). (3) The allowance under section 33(2) in respect of depreciation of assets acquired on or after 1 st April, 1977 specified in column (2) of the Table in Appendix II, shall be calculated at the percentage specified in the column (3) thereof on the actual cost to the assessee as are used for the purposes of the business of the assessee at any time during the tax year. (4) The aggregate depreciation allowed under section 33(2), in respect of any asset for different tax years shall not exceed the actual cost of the said asset. (5) The undertaking specified in section 33(2) may, at its option, be allowed depreciation under sub-rule (1) read with Appendix I instead of the depreciation specified in Appendix II, if option is exercised on or before the due date for furnishing the return of income under section 263(1)(c) for the tax year in which it begins to generate power. (6) Any option under sub-rule (5) once exercised, shall be final and shall apply to all the subsequent tax years. (7) Where any new machinery or plant is installed during the tax year commencing on or after the 1st April, 1987, for the purposes of business of manufacture or production of any article or thing and such article or thing— (a) is manufactured or produced by using any technology (including any process) or other know- how developed in; or (b) is an article or thing invented in, a laboratory owned or financed by the Government or a laboratory owned by a public sector company or a University or an institution recognised in this behalf by the Secretary, Department of Scientific and Industrial Research, Government of India, such plant or machinery shall be treated as a part of block of assets qualifying for depreciation at the rate of 40% of written down value, if the following conditions are fulfilled:— (i) the right to use such technology (including any process) or other know- how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner; (ii) the return furnished by the assessee for his income, or the income of any other person in respect of which he is assessable, for any tax year in which the said machinery or plant is acquired, shall be accompanied by a certificate from the Secretary, Department of Scientific and Industrial Research, Government of India, to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory ; and (iii) the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Schedule XIII to the Act. (8) For the purposes of sub-rule (7),– (a) "laboratory financed by the Government" means a laboratory owned by any body including a society registered under the Societies Registration Act, 1860 (2 of 1860) and financed wholly or mainly by the Government; (b) "public sector company" means any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013); and (c) "University" means a University established or incorporated by or under a Central, State or Provincial Act and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a University for the purposes of that Act.

26. Cases and circumstances in which a payment or aggregate of payments exceeding ten thousand rupees may be made to a person in a day, otherwise than by specified banking and online mode or through such other electronic mode as provided in rule 48.– (1) No disallowance under section 36(4) shall be made and no payment shall be deemed to be the profits and gains of business or profession under section 36(5) where a payment or aggregate of payments made to a person in a day, otherwise than by a specified banking or online mode or through such other electronic mode as provided in rule 48, exceeds ten thousand rupees, in the following cases and circumstances:- (a) where the payment is made to- (i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); or (ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); or (iii) any co-operative bank or land mortgage bank; or (iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949 (10 of 1949); or (v) the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956); (b) where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender; (c) where the payment is made by- (i) any letter of credit arrangements through a bank; or (ii) a mail or telegraphic transfer through a bank; or (iii) a book adjustment from any account in a bank to any other account in that or any other bank; or (iv) a bill of exchange made payable only to a bank; (d) where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee; (e) where the payment is made for the purchase of– (i)agricultural or forest produce; or (ii)the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or (iii)fish or fish products; or (iv)the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products; (f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products; (g) where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town; (h) where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed fifty thousand rupees; (i) where the payment is made by an assessee by way of salary to his employee after deducting the income- tax from salary in accordance with the provisions of section 392, and when such employee– (i) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and (ii) does not maintain any account in any bank at such place or ship; (j) where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person; (k) where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business. (2) For the purposes of this rule,– (a) the term "bank", in clause (c) and clause (g), means any bank, banking company or society referred to in sub-clauses (i) to (iv) of clause (a) and includes any bank not being a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), whether incorporated or not, which is established outside India; and (b) "authorised dealer" or "money changer", in clause (k), means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law in force.

27. Form of statement to be furnished regarding certain preliminary expenses eligible for deduction under section 44.– (1) The statement containing particulars of expenditure required to be furnished under section 44(3) shall be in Form No. 5 for each tax year. (2) Form No. 5 shall be furnished to the Director General of Income-tax (Systems) or any person authorised by him, one month prior to the due date for furnishing the return of income as specified under section 263(1).

28. Form of audit report for claiming deduction for certain preliminary expenses under section 44 and expenditure for prospecting certain minerals under section 51.– The report of audit of the accounts of an assessee, other than a company or a co-operative society, under section 44(6) or section 51(7), shall be furnished in Form No. 6.

29. Prescribed authority and process of approval for expenditure on scientific research under section 45(1)(a)(ii) and (2).– (1) For the purposes of clause (b) read with clause (a)(ii) of section 45(1), the prescribed authority shall be Principal Chief Commissioner of Income tax (Exemptions) in concurrence with the Secretary, Department of Scientific and Industrial Research, Government of India. (2) For the purposes of section 45(2),–– (a) the prescribed authority shall be Secretary, Department of Scientific and Industrial Research, Government of India; (b) no company shall be entitled for deduction under said section, unless it enters into an agreement with the prescribed authority for co-operation in research and development facility and fulfils such conditions with regard to maintenance of books of account and audit thereof and furnishing of reports in the manner provided in this rule; (c) the application for entering into an agreement specified in clause (b) shall be made by a company in Form No.11; (d) the prescribed authority shall,–– (i) if he is satisfied that the conditions mentioned in section 45(2) and specified in this sub-rule are fulfilled, pass an order in writing in Form No. 14, approving the facility within four months from the end of the month in which application is received; (ii) where an application is rejected, a reasonable opportunity of being heard shall be granted to the company; and (iii) furnish a copy of such order to the Chief Commissioner of Income-tax having jurisdiction over such company; (e) approval of expenditure incurred on in-house research and development facility by a company shall be subject to the following conditions,:— (i) the facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of similar nature; (ii) the prescribed authority shall furnish electronically its report–– (A) in relation to the approval of in-house research and development facility in Part A of Form No. 12; (B) quantifying the expenditure incurred on in-house research and development facility by the company during the tax year and eligible for deduction under section 45(2) in Part B of Form No. 12; (iii) the report in Form No. 12 referred to in sub-clause (ii) shall be furnished electronically by the prescribed authority to the Chief Commissioner of Income-tax having jurisdiction over such company within one hundred and twenty days,— (A) of the grant of the approval, in a case referred to in sub-clause (ii)(A); (B) of the submission of the audit report, in a case referred to in sub-clause (ii)(B); (iv) the company shall maintain separate books of account for each approved facility which shall be audited annually; (v) a report of audit in Form No. 13 shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in section 263(1)(c) for furnishing the return of income, for each succeeding tax year; (vi) the company shall attach copy of such audited annual account with the return of income to be filed under section 263(1)(a) for each tax year; (vii) the company shall ensure that the capital and revenue expenditure on in-house research and development facility is reflected in the schedules or notes to accounts in the audited financial statement of the company prepared for the purposes of its annual report and for the purposes of computation of income-tax; and (viii) the assets acquired by the approved facility shall be utilised only for the approved purpose and shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research. (3) For the purposes of this rule, ―audited‖ means the audit of accounts by an accountant, as defined in section 515(3)(b).

30. Prescribed authority and process of approval for expenditure on scientific research under section 45(3)(c). – (1) For the purposes of section 45(3)(c)(i) to (iii), the head of the National Laboratory or the University or the Indian Institute of Technology, as the case may be, shall be the prescribed authority. (2) For the purposes of section 45(3)(c)(iv), the Principal Scientific Adviser to the Government of India shall be the prescribed authority. (3) The application for obtaining approval of scientific research programme under section 45(3)(c) shall be made by a sponsor in Form No. 7. (4) The prescribed authority shall, if he is satisfied that it is feasible to carry out the scientific research programme then, subject to other conditions specified in this rule, pass an order in writing in Form No. 8, approving such programme within two months from the end of the month in which application is received, to be effective for such period not exceeding five tax years. (5) For the purposes of sub-rule (4), the Principal Scientific Adviser to the Government of India may authorise an officer, not below the rank of a Deputy Secretary, to issue such order, after the scientific research programme has been approved by him. (6) A reasonable opportunity of being heard shall be granted to the sponsor before rejecting an application. (7) Approval of a scientific research programme under section 45(3)(c) shall be subject to the following conditions:— (a) the programme should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature; (b) the National Laboratory, University, Indian Institute of Technology or specified person, as the case may be, shall maintain a separate account for each approved programme; (c) the account shall be audited annually and a copy thereof shall be furnished to the Chief Commissioner of Income-tax having jurisdiction over the sponsor on or before the due date specified in section 263(1)(c) for furnishing the return of income, for each succeeding tax year; (d) the following information or statement or report shall be submitted to the Chief Commissioner of Income-tax having jurisdiction over the sponsor:–– (A) a report in Form No. 10 by the prescribed authority within a period of three months from the date of granting approval to the programme showing progress of implementation of the approved programme and actuals of expenditure incurred thereon, by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, as the case may be; (B) a completion certificate along with a copy of the report on the research activities carried out and salient features of the result obtained and its further application for commercial exploitation, jointly by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, on completion of the approved programme; (C) a copy of the audited statement of accounts for the approved programme, by the Head of the National Laboratory, University or Indian Institute of Technology or the Principal Scientific Adviser to the Government of India, within six months of the completion of the programme; (e) the prescribed authority shall not extend the duration of the programme or approve any escalation in costs; and (f) the assets acquired by the National Laboratory, University, Indian Institute of Technology or specified person, for executing the approved programme shall not be disposed of without the approval of the Chief Commissioner of Income-tax having jurisdiction over the sponsor. (8) The National Laboratory, University, Indian Institute of Technology or specified person shall issue a receipt of payment for carrying out an approved programme of scientific research in Form No. 9. (9) The sponsor, may, at least three months before the expiry of the effective period of the order passed under sub-rule (4), make an application to the prescribed authority for passing a fresh order. (10) For the purposes of this rule, (a) ―audited‖ means the audit of accounts by an accountant, as defined in the section 515(3)(b); and (b) ―sponsor‖ means a person who makes an application in Form No. 7.

31. Furnishing of statement of particulars in respect of donation and certificate to donor under section 45(4)(a).– (1) For the purposes of section 45(4)(a), the deduction in respect of any sum paid to the research association, University, college or other institution referred to in 45(3)(a) or the company referred to in 45(3)(b) shall not be allowed, unless such research association, University, college or other institution or company–– (a) prepares statement in Form No. 15 for each tax year and deliver or cause to be delivered to the Director General of Income-tax (Systems) or the person authorised by him; and (b) furnish to the donor, a certificate specifying the amount of donation in Form No. 16 (2) The research association, University, college or other institution or company shall, while aggregating the amounts for determining the sums received for reporting in respect of any person, — (a) take into account all the donations of the same nature paid by that person during the tax year; and (b) proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors. (3) The person who is authorised to verify the return of income under section 265 shall verify Form No. 15. (4) Statement of particulars in Form No. 15 and the certificate to the donor in Form No. 16 shall be furnished on or before the 31st May, immediately following the tax year in which the donation is received.

32. Procedure, form and manner in respect of approval under section 45(4) read with section 45(3)(a) for deduction for expenditure on scientific research by a research association.– (1) An application for approval under section 45(4)(b) in Form No. 17 shall be made to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which the approval is sought. (2) Where approval is sought— (a) from the tax year 2026-2027; or (b) from the tax year in which the applicant is incorporated, the application for approval may be made at any time during the said tax year. (3) The person who is authorised to verify the return of income under section 265, as applicable to the applicant shall verify Form No. 17. (4) If the research association claims an exemption as per Schedule III [Table: Sl. No. 23], then the Annexure to Form No. 17 shall also be filled out. (5) The applicant shall send a copy of the application to Member (IT), Central Board of Direct Taxes accompanied by its acknowledgement receipt as evidence of having furnished the application as per sub-rule (1). (6) Where an application is made under sub-rule (1), every notification under section 45(4)(b) shall be issued or an order rejecting the application shall be passed by the Central Government recording reasons therefor in writing, within twelve months from the end of the quarter in which such application was received in the office of Member (IT), CBDT. (7) Any notification issued by the Central Government under section 45(4)(b) shall, at any time, have effect for such tax year or years, not exceeding five tax years as may be specified in such notification. (8) If any defect is noticed in the application, or if any relevant document is not attached thereto, the Commissioner of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the end of the month in which application is received in his office. (9) The applicant shall remove the deficiency referred to in sub-rule (8) within a maximum period of one month from the end of the month in which the deficiency letter is served and if the applicant fails to remove such deficiency within the period so allowed, the Commissioner of Income-tax shall send his recommendation for treating the application as invalid to the Member (IT), Central Board of Direct Taxes. (10) The Central Government, if satisfied, may pass an order, for reasons to be recorded in writing, treating the application as invalid. (11) If the application is complete in all respects, the Commissioner of Income-tax, may make such inquiry as he may consider necessary regarding the genuineness of the activity of the research association or University or college or other institution and send his recommendation to the Member (IT), CBDT for grant of approval or rejection of the application before the expiry of the period of three months from the end of the quarter in which the application was received in his office. (12) The Central Government may, before granting approval under section 45(4)(b), call for such documents or information from the applicant as it may consider necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant. (13) The Central Government may withdraw the approval granted under section 45(4)(b), if it is satisfied that the research association or University or college or other institution has ceased its activities, or its activities are not genuine, or are not being carried out in accordance with all or any of the conditions specified under rule 33 or rule 34. (14) No order treating the application as invalid, or rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard. (15) A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to the applicant, the Assessing Officer and the Commissioner of Income-tax having jurisdiction over the applicant. (16) The applicant, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (6), make an application to the Commissioner of Income-tax having jurisdiction over the applicant for issue of a fresh notification.

33. Conditions subject to which approval is to be granted to a research association for deduction for expenditure on scientific research under section 45(4) read with section 45(3)(a).– (1) The sole object of the applicant research association shall be to undertake scientific research or research in social science or statistical research, as the case may be. (2) The applicant research association shall carry on the research activity by itself. (3) The research association seeking approval under section 45(4)(b) shall–– (a) maintain books of account; (b) get such books audited by an accountant as defined in the section 515(3)(b); and (c) furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the research association, by the due date of furnishing the return of income under section 263(1). (4) The research association shall maintain a separate statement of donations received and amount applied for scientific research or research in social science or statistical research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3). (5) The research association shall, by the due date of furnishing the return of income under section 263(1), furnish a statement to the Commissioner of Income-tax containing— (a) a detailed note on the research work undertaken by it during the tax year; (b) a summary of research articles published in national or international journals during the tax year; (c) any patent or other similar rights applied for or registered during the tax year; and (d) programme of research projects to be undertaken during the forthcoming tax year and the financial allocation for such programme. (6) If it is found by the Commissioner of Income-tax that the research association,— (a) is not maintaining books of account; or (b) has failed to furnish its audit report; or (c) has not furnished its statement of the sums received and the sums applied for scientific research or research in social science or statistical research or a statement referred to in sub-rule (5); or (d) has ceased to carry on its research activities, or its activities are not genuine; or (e) is not fulfilling the conditions subject to which approval was granted to it, he may, after making appropriate enquiries, furnish a report on the circumstances referred to in clauses (a) to (e), to the Central Government within six months from the date of furnishing the return of income under section 263(1).

34. Conditions subject to which approval is to be granted to a University, college or other institution for deduction for expenditure on scientific research under section 45(4) read with section 45(3)(a).– (1) The sum paid to a University, college or other institution shall be used for scientific research and research in social science or statistical research. (2) The applicant University, college or other institution shall carry out scientific research, research in social science or statistical research through its faculty members or its enrolled students. (3) A University or college or other institution approved under section 45(4)(b), shall– (a) maintain separate books of account in respect of the sums received by it for scientific research or, as the case may be, for research in social science or statistical research; (b) reflect therein the amount used for carrying out research; (c) get such books of account audited by an accountant, as defined in the section 515(3)(b); and (d) furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under section 263(1). (4) The University or college or other institution shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3). (5) The University, college or other institution shall, by the due date of furnishing the return of income under section 263(1), furnish a statement to the Commissioner of Income-tax containing— (a) a detailed note on the research work undertaken by it during the tax year; (b) a summary of research articles published in national or international journals during the tax year; (c) any patent or other similar rights applied for or registered during the tax year; (d) the programme of research projects to be undertaken during the forthcoming tax year and the financial allocation for such programme. (6) If it is found by the Commissioner of Income-tax that the University or college or other institution— (a) is not maintaining separate books of account for research activities; or (b) has failed to furnish its audit report; or (c) has not furnished its statement of the sums received and the sums used for research or a statement referred to in sub-rule (5); or (d) has ceased to carry on its research activities, or its activities are not genuine; or (e) is not fulfilling the conditions subject to which approval was granted to it, he may, after making appropriate enquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the Central Government within six months from the date of furnishing the return of income under section 263(1).

35. Prescribed authority, procedure, form, manner and conditions for approval by a company for deduction for expenditure on scientific research under section 45(3)(b).– (1) For the purposes section 45(3)(b), the prescribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the applicant. (2) The procedure, form and manner in respect of approval under section 45(3)(b) shall be as under:— (a) An application for approval under section 45(3)(b) by a company shall be made in Form No. 17 to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which the approval is sought. (b) where approval is sought— (i) from the tax year 2026-2027; (ii) from the tax year in which the applicant is incorporated, application for approval may be made at any time during the said tax year. (c) The person who is authorised to verify the return of income under section 265, as applicable to the applicant shall verify Form No. 17. (d) The applicant shall send a copy of the application to the prescribed authority, accompanied by the acknowledgement receipt as evidence of having furnished the application as per sub-rule (2)(a). (e) Every order for approval under section 45(3)(b) shall be issued, or an order rejecting the application shall be passed, within a period of twelve months from the end of the quarter in which the application was received in the Office of the Chief Commissioner of Income-tax. (f) If any defect is noticed in the application in Form No. 17, or if any relevant document is not attached thereto, the Commissioner of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the end of the month in which application is received in his office. (g) The applicant shall remove the deficiency within a maximum period of one month from the end of the month in which the deficiency letter is served and if the applicant fails to remove the deficiency within the period so allowed, the Commissioner of Income-tax shall send his recommendation for treating the application as invalid to the Chief Commissioner of Income-tax. (h) The Chief Commissioner of Income-tax may, after examining the re-commendations referred to in clause (g), pass an order that the application is invalid. (i) If the application form is complete in all respects, the Commissioner of Income-tax may, make such inquiry as he may consider necessary regarding the genuineness of the activity of the company and send his recommendation to the Chief Commissioner of Income-tax, for grant of approval or rejection of the application, before the expiry of the period of three months from the end of the quarter in which the application was received in his office. (j) The Chief Commissioner of Income-tax may, before granting approval under section 45(3)(b), call for such documents or information from the applicant as he considers necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant. (k) The Chief Commissioner of Income-tax may, under section 45(3)(b), pass an order granting approval to the company, or for reasons to be recorded in writing, reject the application. (l) The Chief Commissioner of Income-tax, as referred in sub-rule (1), may withdraw the approval granted under section 45(3)(b), if he is satisfied that the company has ceased to carry on its activities or its activities are not genuine or are not being carried on in accordance with all or any of the conditions under this rule. (m) No order treating the application as invalid or rejecting the application or withdrawing the approval shall be passed without giving a reasonable opportunity of being heard. (n) A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to the applicant, the Assessing Officer and the Commissioner of Income-tax. (o) Any order passed by the Chief Commissioner of Income-tax under this rule shall, at any one time, have effect for such tax year or years, not exceeding five tax years, as may be specified in the order. (p) The applicant, may, at least three months before the expiry of the effective period of the order issued under sub-rule (2)(e), make an application to the Commissioner of Income-tax having jurisdiction over the applicant for passing a fresh order. (3) Approval to a company under section 45(3)(b) shall be subject to the following conditions:— (a) the sum paid to the company shall be used for scientific research; (b) the applicant company shall carry on scientific research through its own employees using its own assets; (c) a company approved under section 45(3)(b), shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amount used for carrying on research, get such books of account audited by an accountant as defined under section 515(3)(b), and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under section 263(1)(c). (d) the company shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in clause (c); (e) subsequent to approval, the company shall, every year, by the due date of furnishing the return of income under section 263(1)(c), furnish a statement to the Commissioner of Income-tax having jurisdiction over the case containing the following information:— (i) a detailed note on the research work undertaken by it during the tax year; (ii) a summary of research articles published in national or international journals during the tax year; (iii) any patents or other similar rights applied for or registered during the tax year; (iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such subjects; and (f) if it is found by the Commissioner of Income-tax that the company,— (i) is not maintaining separate books of account for research activities; or (ii) has failed to furnish its audit report; or (iii) has not furnished its statement of the sums received and the sums used for research, or a statement referred to in clause (e); or (iv) has ceased to carry on its research activities, or its activities are not genuine; or (v) is not fulfilling the conditions subject to which approval was granted tso it, he may after making appropriate enquiries, furnish a report on the circumstances referred to in sub-clauses (i) to (v) to the jurisdictional Chief Commissioner of Income-tax within six months from the date of furnishing the return of income under section 263(1).

36. Procedure for notification of an affordable housing project as a specified business under section 46(11)(d)(vii) and a semiconductor wafer fabrication manufacturing unit as a specified business under section 46(11)(d)(xiii).– (1) The applicant shall apply for notification of–– (a) an affordable housing project (herein referred to as ―the project‖) as a specified business under section 46(11)(d)(vii), in Form No. 18; or (b) a semiconductor wafer fabrication manufacturing unit (herein referred to as ―the unit‖) as a specified business under section 46(11)(d)(xiii), in Form No. 19. (2) The notification mentioned in sub-rule (1) shall be in accordance in with the following procedure,:–– (a) the person shall apply for notification of the project or the unit in Form No. 18 or Form No. 19, as the case may be, to Member (IT), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi; (b) if any defect is noticed in the application or if any relevant document, as required is not attached, a deficiency letter may be served on the applicant; (c) the applicant shall remove the deficiency within one month from the end of the month in which such deficiency letter is served; (d) where the applicant fails to remove the deficiency within the period specified in clause (c), the Board, if satisfied, may pass an order treating the application as invalid; (e) the Board may, before granting approval, call for such details, documents or information from the applicant as well as from the income-tax authorities and other Departments or agencies, as it may deem fit; (f) the Board may issue the notification granting approval to the project or the unit, as the case may be, or reject the application, after recording the reasons for rejection in writing; (g) the Board may withdraw the approval in the case of a project or a unit, if it is satisfied that–– (i) the assessee has ceased its activities relating to the specified business; or (ii) such activities are not genuine or are not being carried out in accordance with all or any of the conditions under section 46 or under this rule; (h) the Board may also withdraw the approval in respect of a unit under section 46(11)(d)(xiii), if it is satisfied that the approval granted by the competent authority on the recommendations of the Appraisal Committee under the Modified Special Incentive Package Scheme of the Department of Electronics and Information Technology has been withdrawn; (i) an opportunity of being heard shall be given to the applicant, if an order invalidating or rejecting the application or withdrawing the approval or cancellation of the notification, were to be passed; and (j) a copy of order mentioned in clause (i) shall be communicated to the applicant as well as the Assessing Officer and the Commissioner having jurisdiction over the applicant; (3) The applicant mentioned in sub-rule (1) shall maintain separate books of account with complete details of all capital expenditure incurred during the tax year for which it intends to claim the said deduction under section 46 and shall file the relevant income-tax returns by the due date to avail the tax benefit under the said section. (4) A project notified under section 46(11)(d)(vii) or a unit notified under section 46(11)(d)(xiii), as the case may be, shall continue to be governed by the provisions of this rule to the extent it is not in contravention with the provisions of the Act. (5) A project shall be considered for notification under section 46(11)(d)(vii), if it fulfils the following conditions,:–– (a) the project shall have prior sanction of the competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Affairs, Government of India; (b) the date of commencement of operations of the project shall be on or after the 1st April 2011; (c) the project shall be on a plot of land with a minimum area of one acre and out of the total allocable rentable area of the project, the affordable housing units shall comprise of at least– (i) 30% for Economically Weaker Section (EWS) category; (ii) 60% for Economically Weaker Section (EWS) and Lower Income Group (LIG) categories; and (iii) 90% for Economically Weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) categories; (d) the remaining 10% or less of the total allocable rentable area of the project may comprise of other residential or commercial units; (e) the design, layout and specifications of the project to be developed and built shall be approved by the State Government or Union territory Administration or its designated implementing agency; and (f) the project shall be completed within a period of five years from the end of the tax year in which the project is sanctioned by the competent authority mentioned in clause (a). (6) A unit shall be considered for notification under section 46(11)(d)(xiii), if it fulfils the following conditions:–– (a) the unit shall be exclusively for the manufacture of semiconductor wafer fabrications; (b) the unit shall have prior approval of the competent authority on the recommendations of Appraisal Committee under the Modified Special Incentive Package Scheme notified by the Department of Electronics and Information Technology, Ministry of Communications and Information Technology, Government of India; (c) the date of commencement of operations, being the date on which the commercial production of the unit commences, shall be on or after the 1st April 2014; and (d) the unit may have one or more manufacturing facilities, but all the facilities shall be located in India. (7) For the purposes of sub-rule (5),–– (a) "affordable housing units" shall be of the following categories: Category Rentable Area (in square metres) Specified cities Other cities Economically Weaker Up to 25 Up to 30 Sections (EWS) Low Income Group (LIG) Greater than 25 and Greater than 30 and up to 50 up to 60 Middle Income Group Greater than 50 and Greater than 60 and (MIG) up to 70 up to 85; (b) "date of commencement of operations" means the date on which the project is sanctioned by the competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Affairs, Government of India, for a project to be considered for notification under section 46(11)(d)(vii); (c) "housing unit" means an independent residential unit with separate facilities for living, cooking and sanitary requirements, distinctly separated from other residential units within the building – (i) directly accessible from an outer door or through an interior door in a shared hallway and not by walking through another household's living space; and (ii) excluding any shared dining areas; (d) "project" means an affordable housing project; (e) "rentable area" means the carpet area at any floor level, including the carpet area of kitchen, pantry, store, lavatory, bathroom, 50% of unglazed verandah and 100% of glazed verandah, in accordance with the provisions of the Indian Standard - Method of Measurement of Plinth, Carpet and rentable Areas of Buildings, IS 3861:2002, formulated and published by the Bureau of Indian Standards; (f) "specified cities" mean– (i) the urban agglomerations comprising of the area included on the basis of the latest census, of Greater Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore, Ahmedabad; (ii) the districts of Faridabad, Gurgaon, Gautham Budh Nagar, Ghaziabad, Gandhinagar; and (iii) the city of Secunderabad; and (g) "total allocable rentable area" means the total rentable area of all the proposed housing units or non- housing units but excluding the areas earmarked for common facilities and services. (8) For the purposes of sub-rule (6),–– (a) "competent authority" means the authority approving the unit under the Modified Special Incentive Package Scheme notified by the Government of India, Ministry of Communications and Information Technology, Department of Electronics and Information Technology; (b) "date of commencement of operations" means the date on which the commercial production of the unit commences; (c) "semiconductor wafer fabrications" means integrated circuits which are covered in the National Industrial Classification, 2008 under Division 26; Group 261; Class 2610; Sub-class 26103; and (d) "unit" means a manufacturing facility for semiconductor wafer fabrications.

37. Procedure for approval of agricultural extension project under section 47(1)(a).– (1) The agricultural extension project (herein referred as the project) shall be considered for notification, if it fulfils the following conditions,:— (a) the project shall be undertaken by an assessee for training, education and guidance of farmers; (b) the project shall have prior approval of the Ministry of Agriculture and Farmers Welfare, Government of India; and (c) an expenditure (not being expenditure in the nature of cost of any land or building) exceeding the amount of ₹ 25,00,000 is expected to be incurred for the project. (2) Before undertaking any project, an assessee shall make an application in Form No. 20 to the Member (IT), CBDT for notification of such project under section 47(1)(a). (3) The application referred to in sub-rule (2) shall also be accompanied by– (a) a letter approving the project and specifying the amount of expenditure expected to be incurred on the project, from the Ministry of Agriculture and Farmers Welfare, Government of India; (b) a detailed note on the agricultural extension project to be undertaken by the assessee; and (c) details of the expenditure expected to be incurred on the project and expected date of completion of the project. (4) Where any defect is noticed in the application referred to in sub-rule (2) or a relevant document is not attached thereto, the Board shall, before the expiry of one month from the end of the month in which the application is received in its office, intimate the defect to the applicant for its rectification. (5) The applicant shall remove the defect within a period of one month form the end of the month in which intimation letter is served on him. (6) Where the applicant fails to remove the deficiency within the period mentioned in sub-rule (5), the Board shall, within one month from the time period specified in the said sub-rule, pass an order treating the application as invalid. (7) If the application is complete in all respects, the Board shall, within two months from the end of the quarter in which it receives such application, issue a notification under section 47(1)(a) in Form No. 21 specifying the project, subject to the conditions mentioned in rule 38 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years. (8) The assessee, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (7), make an application to the Board for notification of such project for a further period. (9) The Board shall, after receiving the application under sub-rule (8), call for a report from the Commissioner of Income-tax, having jurisdiction over the case regarding the activities of the project during the period of notification and fulfilment of conditions specified in rule 38 including any other conditions, if any, subject to which the project was notified under sub-rule (7). (10) On being satisfied with the report received under sub-rule (9) on the project, the Board may, within two months from the end of the quarter in which it receives application referred to in sub-rule (8), notify the said project for a further period not exceeding three tax years. (11) The Board may, on being satisfied that–– (a) the assessee has ceased its activities, or that its activities are not genuine; or (b) its activities are not being carried out in accordance with all or any of the relevant provisions of this rule or rule 38; or (c) its activities are not being carried out in accordance with all or any of the conditions subject to which the notification was issued, pass an order for revocation of the notification issued under sub-rule (7) or sub-rule (10) after providing a reasonable opportunity of being heard. (12) A copy of notification, approval, rejection, or cancellation shall be communicated to– (a) the applicant; (b) the Ministry of Agriculture and Farmers Welfare, Government of India; (c) the Commissioner of Income-tax having jurisdiction over the applicant; (d) the Department of Agriculture of the concerned State; and (e) the Agricultural Technology Management Agency of the concerned district.

38. Conditions for notification of agricultural extension projects under section 47(1)(a).– (1) The assessee undertaking an agricultural extension project (herein referred as the project) shall maintain separate books of account of the project notified under section 47(1)(a) and get such books of account audited by an accountant as defined under section 515(3)(b). (2) The audit report referred to in sub-rule (1) shall include comments of the auditor on the true and fair view of the books of account maintained for the project, the genuineness of the activities of the project, and fulfilment of the conditions specified in the relevant provisions of the Act, the rules, or a notification issued under rule 37. (3) The assessee shall not accept an amount exceeding the amount approved in the notification from the beneficiary under the eligible project for training, education, guidance, or any material distributed for such training, education or guidance. (4) The assessee shall not derive any direct or indirect benefit from the notified project except for the deduction of eligible expenditure in accordance with section 47(1)(a), rule 37 and this rule. (5) The expenses, eligible for deduction under section 47(1)(a), shall be all expenses incurred wholly and exclusively for undertaking an eligible project as reduced by (a) the amount received from the beneficiary; (b) the cost of any land or building; (c) any expenditure on the project that is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly. (6) The assessee shall, on or before the due date of furnishing the return of income under section 263(1), furnish the following to the Commissioner of Income-tax having jurisdiction over the assessee:– (a) the audited statement of accounts of the project for the tax year along with the audit report and the amount of deduction claimed under section 47(1)(a); (b) a note on the project undertaken during the tax year, the programme of the project to be undertaken during the current year, and the financial allocation for such programme; and (c) a certificate from the Ministry of Agriculture and Farmers Welfare, Government of India, regarding the genuineness of the project undertaken by the assessee during the tax year. (7) If it is found by the Commissioner of Income-tax that— (a) the assessee has not maintained separate books of account for the project or has not got such books of account audited by an accountant in accordance with sub-rule (1); or (b) the assessee has not furnished the documents referred to in sub-rule (6); or (c) the assessee has ceased to carry out activities of the project; or (d) the activities of the project of the assessee are not genuine; or (e) the activities of the project are not being carried out in accordance with the relevant provisions of the Act, rules, or the conditions subject to which the notification was issued under rule 37, he may, after making appropriate inquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the Board for appropriate action as per the provisions of rule 37(11).

39. Procedure for approval of skill development projects under section 47(1)(b).– (1) A skill development project (herein referred as the project) shall be considered for notification, if it is undertaken by an eligible company and the project is undertaken in a separate facility in a training institute. (2) Before undertaking any project, the eligible company shall make an application in Form No. 22 to the National Council for Vocational Education and Training (herein referred to as ―National Council‖) for notification of such project under section 47(1)(b). (3) A copy of the application shall also be sent to the Commissioner of Income-tax having jurisdiction over the applicant, along with an acknowledgment receipt as evidence of furnishing of application to the National Council. (4) The application shall be accompanied by– (a) a letter of concurrence from the training institute in which the project is to be undertaken; (b) a detailed note on the skill development project to be undertaken by the eligible company; and (c) details of the expenditure expected to be incurred on the project and expected date of completion of the project. (5) If any defect is noticed in the application referred to in sub-rule (2), or if any relevant document is not attached thereto, the National Council shall, before the expiry of one month from the end of the month in which the application is received in its office, intimate the defect to the applicant for its rectification. (6) The applicant shall remove the defect within a period of one month from the end of the month in which the intimation letter for removal of the deficiency is served. (7) Where the applicant fails to remove the deficiency within the period mentioned in sub-rule (6), the National Council shall send its recommendation for treating the application as invalid to the Board. (8) On receipt of the recommendation of the National Council under sub-rule (7), the Board, if satisfied, may pass an order treating the application as invalid. (9) If the application is complete in all respects,– (i) the National Council may make such inquiry or call for such documents from the eligible company or the training institute as it may consider necessary for satisfying itself regarding the genuineness of the current and proposed activity of the applicant relating to skill development; and (ii) send its recommendation to the Board for grant of approval or rejection of the application before the expiry of two months from the end of the month in which the application, complete in all respects, was received in its office. (10) The Commissioner of Income-tax having jurisdiction over the applicant shall send his recommendation to the National Council for grant of approval or rejection of the application, after considering the compliance of the applicant with the various provisions of the Act before the expiry of one month from the end of the month in which the copy of the application was received in his office. (11) If the National Council recommends the grant of approval under sub-rule (9), the Board shall within two months from the end of the quarter in which it receives the report from the National Council, issue a notification in Form No. 23 under section 47(1)(b), specifying the project, subject to conditions mentioned in rule 40 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years. (12) If the National Council recommends the rejection of the application under sub-rule (9), the Board shall pass an order rejecting the application. (13) If the Board is satisfied with the activities of the project during the period of notification, it may notify the said project for a further period in consultation with the National Council. (14) If the Board is satisfied that–– (a) the eligible company or the training institute has ceased its activities, or that its activities are not genuine; or (b) that its activities are not being carried out in accordance with–– (i) all or any of the relevant provisions of the Act or this rule or rule 40; or (ii) the conditions subject to which the notification was issued, it may pass an order for revocation of the notification issued under sub-rule (11) or sub-rule (13) after providing a reasonable opportunity of being heard. (15) A copy of notification, approval, rejection, or cancellation shall be communicated to– (a) the applicant; (b) the National Council; (c) the training institute; and (d) the Commissioner of Income-tax having jurisdiction over the applicant.

40. Conditions subject to which a skill development project is to be notified under section 47(1)(b).– (1) The company undertaking a skill development project (herein referred as the project) shall maintain separate books of account for the project notified under section 47(1)(b) and get such books of account audited by an accountant as defined in section 515(3)(b). (2) The audit report referred to in sub-rule (1) shall include the comments of the auditor on the true and fair view of the books of account maintained for the project, the genuineness of the activities of the project, and the fulfilment of the conditions specified in the relevant provisions of the Act, rules, or the conditions mentioned in a notification issued under rule 39. (3) A project in respect of existing employees of the company shall not be eligible for notification under section 47(1)(b), where the training of such employees commences after six months of their recruitment. (4) The expenses, eligible for deduction under section 47(1)(b), shall be all expenses incurred wholly and exclusively for undertaking an eligible project as reduced by– (a) the cost of any land or building; and (b) any expenditure on the project that is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly. (5) The company shall, on or before the due date of furnishing the return of income under section 263(1), furnish the audited statement of accounts of the project for the tax year along with the audit report and the amount of deduction claimed under section 47(1)(b), to the Commissioner of Income-tax having jurisdiction over the company. (6) If it is found by the Commissioner of Income-tax that— (a) the company has not maintained separate books of account for the project or has not got such books of account audited by an accountant in accordance with sub-rule (1); or (b) the company has not furnished the documents referred to in sub-rule (5); or (c) the company has ceased to carry out activities of the project; or (d) the activities of the project of the company are not genuine; or (e) the activities of the project of the company are not being carried out in accordance with the relevant provisions of the Act, rules, or the conditions subject to which the notification was issued under rule 39, he shall, after making appropriate inquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the Board for appropriate action under rule 39(14). (7) If the National Council for Vocational Education and Training is not satisfied about the genuineness of the activities of the notified project, it shall send its recommendation to the Board for appropriate action under rule 39(14). (8) For the purposes of this rule and rule 39,– (a)"eligible company" means a company, which is- (i) engaged in the business of manufacture or production of any article or thing, not being an article or thing mentioned at serial numbers 1 and 2 of the list of articles or things specified in the Thirteenth Schedule; or (ii) engaged in providing the following services: 1. accounting services; 2. architect services; 3. automobile repair or maintenance; 4. banking, insurance and financial services including ATM installation, maintenance and operations or banking correspondents or insurance agents; 5. beauty and cosmetology, including hair styling or manicurists or pedicurists; 6. cable operators or Direct To Home (DTH) services; 7. cargo Handling and stevedoring services; 8. construction including painting or woodwork or plumbing or flooring or electrical wiring or installation or maintenance of lifts; 9. courier services; 10. design services including fashion or gems and jewellery or apparel or industrial designing; 11. event management; 12. facilities management, housekeeping, cleaning services; 13. fire and safety services; 14. food processing or preservation services, including post harvesting and post farm-gate skills; 15. health and Wellness services including spa or nutritionists or weight management or health instructors or yoga or gym trainers; 16. home decor services, landscaping; 17. hospital and Healthcare services, such as Lab technicians, nursing and other paramedical staff; 18. hospitality, including culinary skills or catering services; 19. logistics and Transportation by any mode, including by air, sea, road, rail or pipelines, and related services such as driving or operation of heavy machinery equipment, forwarding agents, packers and movers; 20. market research services; 21. media or film or advertising; 22. mining and extraction of mineral resources, including hydrocarbons; 23. packaging and warehousing, including both ambient temperature storage and cold storage, operation of internal container depots and container freight stations; 24. port and maritime services such as dredging, piloting, tug boat operations, shipbuilding, ship scrapping and bunkering; 25. power sector services, including those required for erection or installation or maintenance of equipment or towers, etc. in generation, transmission or distribution sector projects; 26. private security, including guards, supervisors, installation and maintenance of security equipment etc.; 27. refrigeration and air-conditioning; 28. repair and maintenance services, including installation and servicing of household goods or white goods; 29. retail marketing, including shop floor assistants or merchandisers; 30. telecom services, including erection and maintenance of towers; and 31. travel and tourism, including guides or ticketing or sales or cab drives; (b) ―National Council for Vocational Education and Training‖ means the National Council constituted by the Ministry of Skill Development and Entrepreneurship vide Notification No. SD-17/113/2017-E&PW dated 05.12.2018; (c) ―State Council for Vocational Training" means a State Council for Training in Vocational Trades established by a State Government; and (d) "training institute" means a training institute– (i)set up by the Central Government or a State Government or a local authority; (ii)affiliated to a State Council for Vocational Training; (iii)affiliated to, or approved by, or empanelled by, the National Council for Vocational Education and Training; (iv)affiliated to, or approved by, or empanelled by, the Central Government and certified by the National Council for Vocational Education and Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training; or (v)affiliated to, or approved by or empanelled by, the State Government and certified by the National Council for Vocational Education and Training or a State Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training or, as the case may be, the State Council for Vocational Training.

41. Expenditure for obtaining right to use spectrum for telecommunication services.– (1) For the purposes of section 52(7)(a) read with section 52(1)[Table: Sl. No. 3], the term "actually paid" shall mean,— (a) where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make full upfront payment of spectrum fee, the actual payment of expenditure, irrespective of the tax year in which the liability for the expenditure was incurred, according to the method of accounting regularly employed by the assessee; or (b) where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make deferred payment, the amount which would have been payable by the assessee had he opted for full upfront payment of spectrum fee, irrespective of the tax year in which the liability for the expenditure was incurred, according to the method of accounting regularly employed by the assessee. (2) In case of deferred payment referred to in sub-rule (1)(b), where there is failure by the assessee to comply with any of the conditions specified by the scheme of the Department of Telecommunications, Government of India and the Department of Telecommunications terminates the allotment or assignment of spectrum, the Assessing Officer, in exercise of power vested in him under section 52(5), shall re-compute the total income of the assessee for the tax year in which the deduction has been claimed and granted to him by deeming that— (a) the total spectrum fee paid up to the date of termination is the amount "actually paid"; and (b) the spectrum was in force up to the date of its termination for the purpose of determining the number of tax years as required by section 52(1)[Table: Sl. No. 3, C. D].

42. Special provision regarding interest on bad and doubtful debt of specified financial institution.– (1) The provisions of section 56 shall apply in the case of every public financial institution, scheduled bank, State Financial Corporation and State Industrial Investment Corporation, if its income from interest is related to following categories of bad or doubtful debts,:–– (a) in relation to a loan or advance, where,–– (i) interest or instalment of principal remains overdue for a period of more than one hundred and eighty days; or (ii) the account remains out of order in respect of an overdraft or cash credit; or (iii) the bill remains overdue for a period of more than one hundred and eighty days in the case of bills purchased and discounted; or (iv) the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops; or (v) the instalment of principal or interest thereon remains overdue for one crop season for long duration crops; or (vi) the amount of liquidity facility remains outstanding for more than one hundred and eighty days for a securitisation transaction undertaken in terms of the Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021; or (vii) in respect of derivative transactions, the overdue receivables representing positive mark-to- market value of a derivative contract, if these remain unpaid for a period of one hundred and eighty days from the specified due date for payment; and (b) in relation to an account, where,–– (i) a working capital borrowal account with irregular drawings for a continuous period of one hundred and eighty days even though the unit may be working or the borrower's financial position is satisfactory and for this purposes the outstanding in the account based on drawing power calculated from stock statements older than six months would be deemed as irregular; or (ii) the regular or ad hoc credit limits have not been reviewed or renewed within one hundred and eighty days from the due date or date of ad hoc sanction; or (iii) there is erosion in the value of security and the realisable value of the security is less than 50% of the value assessed by the bank or accepted by Reserve Bank of India at the time of last inspection; or (iv) the realisable value of the security, as assessed by the bank or approved valuers or Reserve Bank of India is less than 10% of the outstanding in the borrowal accounts. (2) The provisions of section 56 shall apply in the case of every public company, where its income by way of interest pertains to the following category of bad and doubtful debts,:–– (a) (i) doubtful asset, that is, a debt which has remained a non-performing asset of the nature specified in sub-clause (ii) for a period exceeding two years; (ii) non-performing asset referred to in sub-clause (i) shall be the following:–– (A) an asset, in respect of which, interest has remained overdue for a period of more than one hundred and eighty days; (B) a term loan (other than the one granted to an agriculturist or to a person whose income is dependent on the harvest of crops) inclusive of unpaid interest, when the instalment is overdue for a period of more than one hundred and eighty days or more or on which interest amount remained overdue for a period of more than one hundred and eighty days; (C) a demand or call loan, which remained overdue for a period of more than one hundred and eighty days from the date of demand or call or on which interest amount remained overdue for a period of more than one hundred and eighty days; (D) a bill which remains overdue for a period of more than one hundred and eighty days; (E) the interest in respect of a debt or the income on receivables under the head 'other current assets' in the nature of short-term loans or advances, which facility remained overdue for a period of more than one hundred and eighty days; (F) any dues on account of sale of assets or services rendered or reimbursement of expenses incurred, which remained overdue for a period of more than one hundred and eighty days; (G) the lease rental and hire purchase instalment, which has become overdue for a period of more than one hundred and eighty days; (H) a term loan granted to an agriculturist or to a person, whose income is dependent on the harvest of crops, if the instalment of principal or interest thereon remains unpaid–– (I) for two crop seasons beyond the due date if the income of the borrower is dependent on short duration crops; or (II) for one crop season beyond the due date if the income of the borrower is dependent on long duration crop; (I) in respect of loans, advances and other credit facilities (including bills purchased and discounted), the balance outstanding under the credit facilities (including accrued interest) made available to the same borrower or beneficiary when any of the above credit facilities becomes non- performing asset; and (b) loss asset, that is, an asset which has been identified as loss asset and considered as uncollectible but has not been written off by the assessee. (3) For the purposes of this rule–– (a) an overdraft or cash credit account shall be treated as ―out of order‖ if–– (i) the outstanding balance in the overdraft or cash credit account remains continuously in excess of the sanctioned limit or drawing power for one hundred and eighty days; or (ii) the outstanding balance in the overdraft or cash credit account is less than the sanctioned limit or drawing power but there are no credits continuously for one hundred and eighty days, or the outstanding balance in the overdraft or cash credit account is less than the sanctioned limit or drawing power but credits are not enough to cover the interest debited during the previous one hundred and eighty days period; (b) ―long duration crop‖ means crop with crop season longer than one year; (c) ―public company‖ means a company,–– (i) which is a public company within the meaning of section 2(71) of the Companies Act, 2013 (18 of 2013); (ii) whose main object is carrying on the business of providing long-term finance for construction or purchase of house in India for residential purposes; and (iii) which is registered under section 29A of the National Housing Bank Act, 1987 (53 of 1987) or in accordance with the Housing Finance Companies (NHB) Directions, 1989 or Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 issued by the local Government. (d) ―short duration crop‖ means crop which is not a long duration crop; (e) ―the crop season for each crop‖ means the period up to harvesting of the crops raised, as may be as determined by the State Level Bankers‘ Committee in each State;

43. Form of report of audit to be furnished under section 59(4) for computation of royalty and fee for technical services.– The report of audit of accounts of a non-resident (not being a company) or a foreign company for computation of royalty and fee for technical services, which is required to be furnished under section 59(4), shall be in Form No. 24.

44. Conditions to be fulfilled by a non-resident, engaged in the business of operation of cruise ships under section 61(2) [Table: Sl. No. 2].— For the purposes of section 61(2) [Table: Sl. No. 2], a non-resident assessee, engaged in the business of operation of cruise ships shall, — (a) operate a passenger ship having a carrying capacity of more than two hundred passengers or length of seventy-five meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers; (b) operate such ship on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice; (c) operate such ship primarily for carrying passengers and not for carrying cargo; and (d) operate such ship as per the procedure and guidelines if any, issued by the Ministry of Tourism or Ministry of Ports, Shipping and Waterways.

45. Conditions to be fulfilled by a resident company for purposes of section 61(2) [Table: Sl. No. 6].— (1) For the purposes of section 61(2) [Table: Sl. No. 6], a resident company shall, — (a) be establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India under any scheme notified by the Central Government in the Ministry of Electronics and Information Technology and as modified from time to time; and (b) not become ineligible for the such scheme at any time of the tax year for which tax is to be calculated for the income of the non-resident. (2) For the purposes of this rule, ‗electronics goods‘ shall mean goods covered under any scheme referred to in sub-rule (1), including their supply chain ecosystem.

46. Maintenance of books of account under section 62.– (1) Every person required to keep and maintain books of account and other documents under section 62(1)(b) shall maintain such books of account and other documents that enable the Assessing Officer to compute his total income under the Act. (2) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or profession of authorised representative or film artist, shall keep and maintain the books of account and other documents specified in sub-rule (4). (3) The provisions of sub-rule (2) shall not apply– (i) in relation to any tax year in the case of any person, if his total gross receipts in the profession do not exceed ₹ 150000 in any one of the three years immediately preceding the tax year; or (ii) where the profession has been newly set up in the tax year, his total gross receipts in the profession for that year are not likely to exceed the said amount. (4) The books of account and other documents referred to in sub-rule (2) shall be the following:— (a) a cash book; or (b) a journal, if the accounts are maintained according to the mercantile system of accounting; or (c) a ledger; or (d) for sums equal to or exceeding two hundred and fifty rupees, copies of bills or receipts issued by him; or (e) original bills and receipts in respect of expenditure equal to or exceeding two hundred and fifty rupees incurred by the person and issued to him; or (f) payment vouchers prepared and signed by the person, where the expenditure incurred does not exceed two hundred and fifty rupees, and the cash book maintained by the person does not contain adequate particulars in respect of such expenditure; (5) In this rule,— (a) "authorised representative" means a person who represents any other person, on payment of any fee or remuneration before– (i) any Tribunal; or (ii) any authority constituted or appointed by or under any law for the time being in force; but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy; (b) "cash book" means a record of all cash receipts and payments, kept and maintained day-to-day and giving the cash balance in hand at the end of each day or at the end of a specified period not exceeding a month; (c) "film artist" means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person, as— (i) an actor; or (ii) a cameraman; or (iii) a director, including an assistant director; or (iv) a music director, including an assistant music director; or (v) an art director, including an assistant art director; or (vi) a dance director, including an assistant dance director; or (vii) an editor; or (viii) a singer; or (ix) a lyricist; or (x) a story writer; or (xi) a screen-play writer; or (xii) a dialogue writer; or (xiii) a dress designer. (6) A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (4), keep and maintain the following:— (i) a daily case register in Form No. 25; (ii) an inventory under broad heads, as on the first and the last day of the tax year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession; (7) The books of account and other documents specified in sub-rules (1), (4) and (6) other than those relating to a tax year which has come to an end shall be kept and maintained by the person at– (a) the place where he is carrying on the profession; or (b) where the profession is carried on in more places than one, at the principal place of his profession; or (c) if the person keeps and maintains separate books of account in respect of each place where the profession is carried on, such books of account and other documents may be kept and maintained at the respective places at which the profession is carried on. (8) The books of account and other documents specified in sub-rules (1), (4) and (6) maintained in electronic mode shall remain accessible in India at all times, and the backup of such books of account and other documents maintained in electronic mode, shall be kept on a daily basis in servers physically located in India. (9) The books of account and other documents specified in sub-rules (1), (4) and (6) shall be kept and maintained for a period of seven tax years from the end of the relevant tax year. (10) Where the assessment in relation to any tax year has been reopened under section 279 or under section 147 of the Income-tax Act, 1961 (43 of 1961), as it existed prior to its repeal, all the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment, so reopened has been completed.

47. Report of audit of accounts to be furnished under section 63.– (1) The report of audit of the accounts of a person required to be furnished under section 63 shall,— (a) in the case of a person who carries on business or profession and who is required by or under any law other than the Act to get his accounts audited, be in Part A of Form No. 26; (b) in the case of a person who carries on business or profession, but not being a person referred to in clause (a), shall be in Part B of Form No. 26. (2) The particulars required to be furnished under section 63 shall also be in Part C and D of Form No. 26. (3) The report of audit furnished under this rule may be revised by the person by obtaining a revised report of audit from an accountant as defined in section 515(3)(b), duly signed and verified by such accountant, and shall furnish it before the end of the relevant financial year succeeding the tax year for which the report pertains, if there is payment by such person after furnishing of the report under sub-rules (1) and (2) which necessitates recalculation of the disallowance under section 35 or section 37.

48. Other electronic modes of payment.– For the purposes of Schedule VIII [Table: Sl.No. 1. D(d)], section 66(32), section 146(5)(a)(ii)(B), sections 185, 186 and 188, the other electronic modes of payment shall be the following:— (a) Credit card; (b) Debit card; (c) Net banking; (d) IMPS (Immediate Payment Service); (e) UPI (Unified Payment Interface); (f) RTGS (Real Time Gross Settlement); (g) NEFT (National Electronic Funds Transfer); (h) BHIM (Bharat Interface for Money) Aadhaar Pay; and (i) Tier-III: Full KYC Central Bank Digital Currency wallets, P-CBDC, Wholesale/Cross-border CBDC.

49. Computation of capital gains for purposes of section 67(5).– (1) If a person receives any amount under a specified unit-linked insurance policy, including any bonus allocated on such policy, then the capital gains arising from receipt of such amount in situations referred in column B of the following Table shall be computed according to column C thereof; Table Sl. No. Situations Capital gains A B C 1. Where the amount is received A-B for the first time during the tax Where, year A=the amount received for the first time, including the amount allocated by way of bonus on such policy; and B=the aggregate of the premium paid during the term of the specified unit linked insurance policy till the date of receipt of the amounts referred to as 'A'. 2. Where the amount is received C-D during the tax year, at any time Where, — after the receipt of the amount C=the amount received during the tax year, at any time after the as referred to in Sl.No.1 receipt of the amount as referred to in Sl.No.1, including the amount allocated by way of bonus on such policy excluding the amount that has already been considered for calculation of taxable amount under this sub-rule during the earlier tax year or years; and D =the aggregate of the premium paid during the term of the specified unit linked insurance policy till the date of receipt of the amount referred to as 'C', as reduced by the premium that has already been considered for calculation of taxable amount under this sub-rule during the earlier tax year or years. (2) The capital gains as computed under sub-rule (1) shall be deemed to be the capital gains arising from the transfer of a unit of an equity-oriented fund set up under a scheme of an insurance company that includes unit linked insurance policies. (3) In this rule, the expression "specified unit linked insurance policy" means any unit linked insurance policy referred to in section 2(22)(c).

50. Attribution of income taxable under section 67(10) to capital assets remaining with the specified entity, under section 72.– (1) For the purposes of section 72(5), the amount chargeable to income-tax as income of specified entity under section 67(10), shall be attributed to capital asset remaining with the specified entity in the manner provided in this rule. (2) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of balance in his capital account, chargeable to tax under section 67(10) relates to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount attributable to the capital asset remaining with the specified entity for purpose of section 72(5) shall be– A= B*(C/D). Where,– A= the amount attributable to the capital asset remaining with the specified entity for purpose of section 72(5); B= amount charged under section 67(10); C= increase in, or recognition of, value of the asset remaining with the specified entity, because of revaluation or valuation; and D= aggregate of increase in, or recognition of, value of all assets because of the revaluation or valuation. (3) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, is in excess of the balance in his capital account, charged to tax under section 67(10) does not relates to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount charged to tax under section 67(10) shall not be attributed to any capital asset for the purposes of section 72(5). (4) Irrespective of anything contained in sub-rule (2) or sub-rule (3), where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of balance in his capital account, charged to tax under section 67(10) relate only to the capital asset received by the specified person from the specified entity, the amount charged to tax under section 67(10) shall not be attributed to any capital asset for the purposes of section 72(5). (5) The specified entity shall furnish the details of amount attributed to capital asset remaining with the specified entity in Form No. 27. (6) The person who is authorised to verify the return of income of the specified entity under section 265 shall verify Form No. 27. (7) Form No. 27 shall be furnished on or before the due date referred to in section 263(1)(c) for the tax year in which the amount is chargeable to tax under section 67(10). (8) For the purposes of this rule,– (a) the amount chargeable to tax under section 67(10) shall relate to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, if the revaluation is based on a valuation report obtained from a registered valuer as defined in rule 56 (f); (b) the specified entity shall not be entitled for the depreciation on– (i) the increase in value of an asset on account of its revaluation; or (ii) the recognition of the value of a self-generated asset or self-generated goodwill, due to its valuation; and (c) the expressions "self-generated asset" and "self-generated goodwill" shall have the meanings respectively assigned to them in section 67(11)(b).

51. Other conditions required to be fulfilled by the original fund.– (1) For the purposes of section 70(2) [Table: Sl No.5, C(a)(A)(iv)], the original fund, in a case where a capital asset is transferred to a resultant fund being a Category III Alternative Investment Fund, shall fulfil the condition that the aggregate participation or investment in the original fund, either directly or indirectly, by persons resident in India does not exceed 5% of the corpus of such fund at the time of such transfer. (2) For the purpose of sub-rule (1) the expressions "original fund" and "resultant fund" shall have the meanings respectively assigned to them in section 70(2) [Table: Sl No.5, C(a) and (c)].

52. Rate of exchange for conversion of rupees into foreign currency and reconversion of foreign currency into rupees for purpose of computation of capital gains under section 72.– (1) For the purpose of computing capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company, in the case of an assessee who is a non-resident, the rate of exchange shall be, in the circumstances referred to in column B of the following table, as per column C thereof:— Table S.No Circumstances Rate of Exchange A B C 1. For converting the cost of acquisition of the The average of the telegraphic transfer buying rate and capital asset telegraphic transfer selling rate of the foreign currency initially utilised in the purchase of the said asset, as on the date of its acquisition. 2. For converting the expenditure incurred wholly The average of the telegraphic transfer buying rate and and exclusively in connection with the transfer telegraphic transfer selling rate of the foreign currency of the capital asset referred to in Sl.No. 1, initially utilised in the purchase of the said asset, as on the date of transfer of the capital asset. 3. For converting the full value of consideration The average of the telegraphic transfer buying rate and received or accruing as a result of the transfer telegraphic transfer selling rate of the foreign currency of the capital asset referred to in Sl.No. 1, initially utilised in the purchase of the said asset, as on the date of transfer of the capital asset. 4. For converting the capital gains computed in The telegraphic transfer buying rate of such currency, as the foreign currency initially utilised in the on the date of transfer of the capital asset. purchase of the capital asset into rupees, (2) For the purposes of this rule,– (a) "telegraphic transfer buying rate" shall have the meaning assigned to it in rule 206; and (b) "telegraphic transfer selling rate", in relation to a foreign currency, means the rate of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for selling such currency where such currency is made available by that bank through telegraphic transfer.

53. Computation of fair market value of capital assets for purposes of section 77.– (1) For the purposes of section 77(3)(b), the fair market value of the capital assets shall be the FMV1 determined under sub-rule (2) or FMV2 determined under sub-rule (3), whichever is higher. (2) The FMV1 shall be the fair market value of the capital assets transferred by way of slump sale determined in accordance with the formula— A+B+C+D - L, Where, A = book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) as appearing in the books of accounts of the undertaking or the division transferred by way of slump sale as reduced by the following amount which relate to such undertaking or the division, — (i) any amount of income-tax paid, if any, as reduced by the amount of income-tax refund claimed, if any; and (ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in rule 57; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and L= book value of liabilities as appearing in the books of account of the undertaking or the division transferred by way of slump sale, but not including the following amounts which relates to such undertaking or division, namely: — (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, as reduced by the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; and (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares. (3) FMV2 shall be the fair market value of the consideration received or accruing as a result of transfer by way of slump sale determined in accordance with the formula— E+F+G+H, Where, E = value of the monetary consideration received or accruing as a result of the transfer; F = fair market value of non-monetary consideration received or accruing as a result of the transfer represented by property referred to in rule 57 [Table: Sl.Nos. 1 to 5] determined in the manner provided in the said rule for the said property; G = the price which the non-monetary consideration received or accruing as a result of the transfer represented by property, other than immovable property, which is not covered in rule 57 (Table: Sl.No. 1 to 5), would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer, in respect of property; and H = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property in case the non-monetary consideration received or accruing as a result of the transfer is represented by the immovable property. (4) The fair market value of the capital assets under sub-rules (2) and (3) shall be determined on the date of slump sale and for this purpose valuation date referred to in rule 57 shall also mean the date of slump sale. (5) For the purposes of this rule,– (a) "artistic work" means archaeological collections, drawings, paintings, sculptures or any work of art; and (b) the expressions "registered valuer" and "securities" shall have the meanings as respectively assigned to them in rule 56.

54. Form of report of an accountant in respect of slump sale.– In case of a slump sale under section 77(4), every assessee is required to submit a report from an accountant as defined in section 515(3)(b), in Form No. 28 before the specified date referred to in section 63.

55. Conditions for reference to Valuation Officers under section 91(1)(b).– For the purposes of Section 91(1)(b)(i),– (a) the percentage of the value of the asset shall be 15%; and (b) the amount shall be ten lakh rupees.

56. Meaning of expressions used in determination of fair market value.– For the purposes of this rule and rule 57, — (a) ―balance sheet", in relation to any company, means, — (i) in relation to an Indian company, the balance sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company appointed under the laws relating to companies in force; and (ii) in relation to a company, not being an Indian company, the balance sheet of the company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company, if any, appointed under the laws in force of the country in which the company is registered or incorporated; (b) "merchant banker" means category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); (c) "quoted shares or securities" in relation to shares or securities means a share or security quoted on any recognised stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business; (d) "recognised stock exchange" shall have the same meaning as assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (e) "registered dealer" means a dealer who is registered under Central Sales Tax Act, 1956 (74 of 1956) or general sales tax law for the time being in force in any State including value added tax laws; (f) "registered valuer" shall have the same meaning as assigned to it in section 513; (g) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (h) "unquoted shares and securities", in relation to shares or securities, means shares and securities which are not quoted shares or securities; and (i) ―valuation date" means the date provided in the Table below: Table Sl. No Section Valuation date A B C 1. Section 92 Date on which property or consideration, as the case may be, referred to in section 92 is received by the assessee. 2. Section 79 Date on which the capital asset, being share of a company other than a quoted share, referred to in section 79, is transferred. 3. Section 26(2)(j) Date on which the inventory is converted, or treated, as a capital asset.

57. Determination of fair market value.– For the purpose of following sections referred to in column B of the Table below, the fair market value of the property of the nature referred to column C shall be determined in the manner provided in column D thereof: Table Sl. Section Nature of Property Manner of determination of Fair Market Value No A B C D 1 Sections Jewellery (a) The price which such jewellery would fetch, if sold in 26(2)(j) the open market on the valuation date; or and 92. (b) if the jewellery is received by way of purchase from a registered dealer on the valuation date, the invoice value of such jewellery; or (c) if the jewellery is received by any other mode and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date. 2 Sections Archaeological collections, (a) The price which such artistic work would fetch, if sold in 26(2)(j) drawings, paintings, sculptures the open market on the valuation date; or and 92. or any work of art (herein (b) if the artistic work is received by way of purchase from a referred as artistic work) registered dealer on the valuation date, the invoice value of such artistic work; or (c) if the artistic work is received through any other means and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date. 3 Sections Quoted shares and securities (a) If the quoted shares and securities are received by way of 26(2)(j) transaction carried out through any recognised stock and 92. exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange; or (b) if such quoted shares and securities are received by way of transaction carried out other than through any recog- nised stock exchange, their fair market shall be– (A) the lowest price of such shares and securities quoted on any recognised stock exchange on the valuation date; and (B) in cases, where on the valuation date, there is no trad- ing in shares and securities on any recognised stock exchange, the lowest price of such shares and securi- ties on any recognised stock exchange on a date im- mediately preceding the valuation date when such shares and securities were traded on such stock ex- change. 4 Sections Unquoted equity shares Fair market value of unquoted equity shares = (A + B + C + 26(2)(j), 72 D - L) × (PV)/(PE) and 92. Where,– A = book value of all the assets as appearing in the books of the company (other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet as reduced by– (a) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (b) any amount shown as asset including the unamor- tised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch, if sold in the open market on the basis of the valua- tion report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in this rule; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and L = book value of liabilities shown in the balance sheet, but not including the following amounts:– (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such divi- dends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meet- ing liabilities, other than ascertained liabilities; and (vi) any amount representing contingent liabilities oth- er than arrears of dividends payable in respect of cumulative preference shares; PV = the paid-up value of such equity shares; and PE = total amount of paid-up equity share capital as shown in the balance sheet. 5 Sections Unquoted shares and securities The price it would fetch, if sold in the open market on the 26(2)(j), 72 (other than equity shares in a valuation date and the assessee may obtain a report from a and 92. company) which are not listed in merchant banker or an accountant in respect of such valua- any recognised stock exchange tion. 6 Section Immovable property being land The value adopted or assessed or assessable by any authority 26(2)(j) or building or both of the Central Government or a State Government for the purpose of payment of stamp duty in the respect of such immovable property on the valuation date. 7 Section Any other property other than The price that such property would ordinarily fetch on sale 26(2)(j) referred to at Sl. Nos. 1 to 6 in the open market on the valuation date. above.

58. Prescribed class of persons for the purpose of section 92(3)(i) and section 79.– (1) The provisions of section 92(2)(m) shall not apply to class of persons referred to in column B of the following Table, where such persons receive assets in the nature referred to in column C, subject to satisfaction of the conditions specified in column D thereof: Table S. No Class of persons Nature of Asset Conditions A B C D 1. Resident of an Any immovable Where the Central Government by notification, unauthorised colony in property being land or regularised the transactions of such immovable the National Capital building, or both. property based on the latest power of attorney, Territory of Delhi. agreement to sale, will, possession letter and other documents including documents evidencing payment of consideration for conferring or recognising right of ownership or transfer or mortgage in regard to such immovable property in favour of such resident. 2. Shareholder. Any movable (a) Where the Tribunal, on an application moved by property, being the Central Government under section 241 of the unquoted shares, of a Companies Act, 2013 (18 of 2013), has suspended the company or its Board of Directors of such company and has subsidiary or the appointed new directors nominated by the Central subsidiary of such Government under section 242 of the said Act; and subsidiary (b) where the share of the company or its subsidiary or the subsidiary of such subsidiary has been received by the shareholder pursuant to a resolution plan approved by the Tribunal under section 242 of the Companies Act, 2013 (18 of 2013) after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner. 3 Investor or the Investor Any movable Where the said share has been allotted by the bank property, being equity reconstructed bank under the Scheme at a price shares, of the specified in paragraph 3(3) of the Scheme. reconstructed bank 4 Any person from a Any movable Such shares have been received under strategic public sector company property, being equity disinvestment or the Central shares of a public Government or any sector company or a State Government company 5 The fund management Any movable The shares or units have been received in lieu of entity of the resultant property, being shares shares or units or interest held by the investment fund. or units or interest in manager entity in the original fund, pursuant to the the resultant fund. relocation, subject to the following conditions:– (a) not less than 90% of shares or units or interest in the fund management entity of the resultant fund are held by the same entities or persons, in the same proportion as held by them in the investment manager entity of the original fund; and (b) not less than 90% of the aggregate of shares or units or interest in the investment manager entity of the original fund was held by such entities, or persons. (2) The provisions of section 79 shall also not apply to the transfer of any movable property of the nature mentioned in sub-rule (1) [Table: Sl. No. 2] where the conditions mentioned therein are satisfied. (3) For the purposes of– (a) sub-rule (1) [Table: Sl.No. 1],– (i) "resident" means a person having physical possession of property on the basis of a registered sale deed or latest set of power of attorney, agreement to sale, will, possession letter and other documents including documents evidencing payment of consideration in respect of a property in unauthorised colonies and includes their legal heirs but does not include a tenant, licensee or permissive user; and (ii) "unauthorised colony" shall have the same meaning as assigned to it in clause (b) of section 2 of the National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Act, 2019 (45 of 2019); (b) sub-rule (1) [Table: Sl.No. 2],– (i) a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company; and (ii) "Tribunal" shall have the same meaning as assigned to it in section 2(90) of the Companies Act, 2013 (18 of 2013); (c) sub-rule (1) [Table: Sl.No. 3],– (i) "investor" shall have the same meaning as assigned to it in paragraph 2(1)(b) of the Scheme; (ii) "investor bank" shall have the same meaning as assigned to it in paragraph 2(1)(c) of the Scheme; (iii) "reconstructed bank" shall have the same meaning as assigned to it in paragraph 2(1)(d) of the Scheme; and (iv) "Scheme" means Yes Bank Limited Reconstruction Scheme, 2020. (d) sub-rule (1) [Table: Sl.No. 4], ―strategic disinvestment‖ shall have the same meaning as assigned to it in section 116(3)(c); and (e) sub-rule (1), [Table: Sl.No. 5]- - (i) the expressions "relocation", "original fund" and "resultant fund" shall have the meanings respectively assigned to them in section 70(2) [Table: Sl. No.5]; (ii) "fund management entity" shall have the same meaning as assigned to it in regulation 2(p) of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); and (iii) "investment manager entity" means the fund manager of the original fund regulated by the respective regulation of the jurisdiction in which the original fund is located.

59. Computation of income chargeable to tax under section 92(2)(l).– (1) For the purposes of section 92(2)(l), if a person receives any sum, including the amount allocated by way of bonus, during a tax year under a life insurance policy, then the income chargeable to tax under the said section shall be computed in the following manner:— (i) where the sum is received for the first time under the life insurance policy during the tax year (herein referred to as first tax year), the income chargeable to tax in the first tax year shall be computed in accordance with the formula— A-B Where, — A = the sum or aggregate of sum received under the life insurance policy during the first tax year; and B = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the first tax year that has not been claimed as deduction under any other provision of the Act; and (ii) where the sum is received under the life insurance policy during the tax year subsequent to the first tax year (hereinafter referred to as subsequent tax year), the income chargeable to tax in the subsequent tax year shall be computed in accordance with the formula, — C-D Where, — C = the sum or aggregate of sum received under the life insurance policy during the subsequent tax year; and D = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the subsequent tax year not being premium which— (a) has been claimed as deduction under any other provision of the Act; or (b) is included in amount 'B' or amount 'D' of this sub-rule in any of the year or years preceding the tax year. (2) For the purposes of this rule, the sum received under a life insurance policy shall mean any amount, by whatever name called, received under such policy that is not excluded from the total income of the tax year in accordance with the provisions of Schedule II [Table: Sl.No.2], other than the sum— (a) received under a unit linked insurance policy; or (b) being the income referred to in section 92(2)(d).

270. Determination of income, being partly from agricultural and partly from business.— (1) In terms of section 533(2)(b)(i), in case of income, which is partially agricultural income and partially from business, the market value of any agricultural produce which has been raised by the assessee, or received by him as rent in kind, shall be allowed as a deduction, where — (a) such agricultural produce has been utilised as a raw material in such business; or (b) sale receipts of such agricultural produce are included in the accounts of the business. (2) No further deduction shall be made in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent-in-kind. (3) For the purposes of sub-rule (1) ―market value‖ shall be deemed to be, — (a) where agricultural produce is ordinarily sold in the market in its raw state, or after application to it of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render it fit to be taken to market, the value calculated according to the average price at which it has been so sold during the relevant tax year; and (b) where agricultural produce is not ordinarily sold in the market in its raw state or after application to it of any process referred to in clause (a), the aggregate of — (i) the expenses of cultivation; (ii) the land revenue or rent paid for the area in which it was grown; and (iii) such amount as the Assessing Officer finds, having regard to all the circumstances in each case, to represent a reasonable profit.

271. Income from manufacture of rubber, coffee and tea.— (1) In terms of section 533(2)(b)(i), incomes specified in column B of the following Table, shall be computed as if it were incomes derived from business and the percentage of such incomes specified in column C thereof shall be deemed to be the income liable to tax. Table Sl. Nature of income Percentage No. A B C 1. Income derived from the sale of centrifuged latex or cenex or latex-based crepes (such 35% as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers manu- factured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India 2. Income derived from the sale of coffee grown and cured by the seller in India 25% 3. Income derived from the sale of coffee grown, cured, roasted, and grounded by the 40% seller in India with or without mixing chicory or other flavouring ingredients, 4. Income derived from the sale of tea grown and manufactured by the seller in India 40% (2) In computing the income specified in sub-rule (1), an allowance shall be made in respect of the cost of planting rubber plants, coffee plants and tea bushes, as the case may be, in replacement of plants or bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned. (3) For the purposes of determining such cost referred to in sub-rule (2), no deduction shall be made in respect of the amount of any subsidy, which, under the provisions mentioned in Schedule III [Table: Sl. No. 21] to the Act is not includible in the total income. (4) For the purposes this rule, the expression ―curing‖ shall have the same meaning as assigned to it in section 3(d) of the Coffee Act, 1942 (7 of 1942).

272. Deduction in respect of expenditure on production of feature films.— (1) In computing the profits and gains of the business of production of feature films carried on by a person (herein referred to as the film producer), the deduction in respect of the cost of production of a feature film certified for release by the Board of Film Censors in a tax year shall be allowed in accordance with the provisions of sub-rules (2) to (4). (2) Where a feature film is certified for release by the Board of Film Censors in any tax year and in such tax year,— (a) the film producer sells all rights of exhibition of the film, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such tax year; or (b) the film producer— (i) himself exhibits the film on a commercial basis in all or some of the areas; or (ii) sells the rights of exhibition of the film in respect of some of the areas; or (iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is released for exhibition on a commercial basis at least ninety days before the end of such tax year, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such tax year. (3) Where a feature film is certified for release by the Board of Film Censors in any tax year and in such tax year, the film producer— (a) himself exhibits the film on a commercial basis in all or some of the areas; or (b) sells the rights of exhibition of the film in respect of some of the areas; or (c) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is not released for exhibition on a commercial basis at least ninety days before the end of such tax year, the cost of production of the film in so far as it does not exceed— (i) the amount realised by the film producer by exhibiting the film on a commercial basis; or (ii) the amount for which the rights of exhibition are sold; or (iii) the aggregate of the amounts realised by the film producer by exhibiting the film and by the sale of the rights of exhibition, shall be allowed as a deduction in computing the profits and gains of such tax year and the balance, if any, shall be carried forward to the next following tax year and allowed as a deduction in that year. (4) Where, during the tax year in which a feature film is certified for release by the Board of Film Censors, and the film producer–– (a) does not himself exhibit the film on a commercial basis; or (b) does not sell the rights of exhibition of the film, no deduction shall be allowed in respect of the cost of production of the film in computing the profit and gains of such tax year and entire cost of production shall be carried forward to the next following tax year and allowed as a deduction in that year. (5) Irrespective of anything contained sub-rules (1) to (4), the deduction under this rule shall not be allowed unless,— (a) in a case, where the film producer— (i) has himself exhibited the feature film on a commercial basis; or (ii) has sold the rights of exhibition of the feature film; or (iii) has himself exhibited the feature film on a commercial basis in some areas and has sold the rights of exhibition of the feature film in respect of all or some of the remaining areas, the amount realised by exhibiting the film, or the amount for which the rights of exhibition have been sold or, as the case may be, the aggregate of such amounts, is credited in the books of account maintained by him in respect of the year in which the deduction is admissible; or (b) in a case, where the film producer has transferred the rights of exhibition of the feature film on a minimum guarantee basis, the minimum amount guaranteed and the amount, if any, received or due in excess of the guaranteed amount, or where the film producer follows cash system of accounting, the amount received towards the minimum guarantee and the amount, if any, received in excess of the guaranteed amount, are credited in the books of account maintained by him in respect of the year in which the deduction is admissible. (6) Where the Assessing Officer is of the opinion that— (a) the rights of exhibition of the feature film have been transferred by a mode not covered by this rule; or (b) having regard to the facts and circumstances of the case, it is not practicable to apply the provisions of this rule, he may allow deduction in respect of cost of production of the film in such other manner as he may consider suitable. (7) For the purposes of this rule,— (a) sale of the rights of exhibition of a feature film includes the lease of such rights or their transfer on a minimum guarantee basis; and (b) the rights of exhibition of a feature film shall be considered to have been sold only on the date,— (i) when the positive prints of the film are delivered by the film producer to the purchaser of such rights; or (ii) when the negative of the film is delivered by the film producer to the film distributors defined in rule 273, where in terms of the agreement between the film producer and the film distributor, the positive prints are to be made by the film distributor. (8) In this rule,— (a) ―Board of Film Censors‖ means the Board of Film Censors constituted under the Cinematograph Act, 1952 (37 of 1952); and (b) ―cost of production‖, in relation to a feature film, means the expenditure incurred on the production of the film, not being— (i) the expenditure incurred for the preparation of the positive prints of the film; and (ii) the expenditure incurred in connection with the advertisement of the film after it is certified for release by the Board of Film Censors, and the cost of production of a feature film shall be reduced by the amount of subsidy received under any Government scheme, where such amount has not been included in the total income of the assessee for any tax year.

273. Deduction in respect of expenditure on acquisition of distribution rights of feature films.— (1) In computing the profits and gains of the business of production of feature films carried on by a person (herein referred to as the film distributor), the deduction in respect of the cost of acquisition of a feature film certified for release by the Board of Film Censors in a tax year shall be allowed in accordance with the provisions of sub-rules (2) to (4). (2) Where a feature film is acquired by the film distributor in any tax year and in such tax year,— (a) the film distributor sells all rights of exhibition of the film, the entire cost of acquisition of the film shall be allowed as a deduction in computing the profits and gains of such tax year; or (b) the film distributor— (i) himself exhibits the film on a commercial basis in all or some of the areas; or (ii) sells the rights of exhibition of the film in respect of some of the areas; or (iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is released for exhibition on a commercial basis at least ninety days before the end of such tax year, the entire cost of acquisition of the film shall be allowed as a deduction in computing the profits and gains of such tax year. (3) Where a feature film is acquired by the film distributor in any tax year and in such tax year, the film distributor— (a) himself exhibits the film on a commercial basis in all or some of the areas; or (b) sells the rights of exhibition of the film in respect of some of the areas; or (c) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is not released for exhibition on a commercial basis at least ninety days before the end of such tax year, the cost of acquisition of the film, in so far as it does not exceed— (i) the amount realised by the film distributor by exhibiting the film on a commercial basis; or (ii) the amount for which the rights of exhibition are sold; or (iii) the aggregate of the amounts realised by the film distributor by exhibiting the film and by the sale of the rights of exhibition, shall be allowed as a deduction in computing the profits and gains of such tax year and the balance, if any, shall be carried forward to the next following tax year and allowed as a deduction in that year. (4) Where, during the tax year in which a feature film is acquired by the film distributor, and– (a) he does not himself exhibit the film on a commercial basis; or (b) does not sell the rights of exhibition of the film, no deduction shall be allowed in respect of the cost of acquisition of the film in computing the profit and gains of such tax year and entire cost of acquisition shall be carried forward to the next following tax year and allowed as a deduction in that year. (5) Irrespective of anything contained in sub-rules (1) to (4), the deduction under this rule shall not be allowed unless,— (a) in a case, where the film distributor— (i) has himself exhibited the feature film on a commercial basis; or (ii) has sold the rights of exhibition of the feature film; or (iii) has himself exhibited the feature film on a commercial basis in some areas and has sold the rights of exhibition of the feature film in respect of all or some of the remaining areas, the amount realised by exhibiting the film, or the amount for which the rights of exhibition have been sold or, as the case may be, the aggregate of such amounts, is credited in the books of account maintained by him in respect of the year in which the deduction is admissible; and (b) in a case, where the film distributor has transferred the rights of exhibition of the feature film on a minimum guarantee basis, the minimum amount guaranteed and the amount, if any, received or due in excess of the guaranteed amount or where the film distributor follows cash system of accounting, the amount received towards the minimum guarantee and the amount, if any, received in excess of the guaranteed amount, are credited in the books of account maintained by him in respect of the year in which the deduction is admissible. (6) For the purposes of this rule,— (a) the sale of the rights of exhibition of a feature film includes the lease of such rights or their transfer on a minimum guarantee basis; (b) the rights of exhibition of a feature film shall be considered to have been sold only on the date when the positive prints of the film are delivered by the film distributor to the purchaser of such rights; (c) distributor shall include a sub-distributor; and (d) "cost of acquisition", in relation to a feature film, means the amount paid by the film distributor to the film producer or to another distributor under an agreement entered into by the film distributor with such film producer or such other distributor, as the case may be, for acquiring the rights of exhibition and, where the rights of exhibition have been acquired on a minimum guarantee basis, the minimum amount guaranteed, not being— (i) the amount of expenditure incurred by the film distributor for the preparation of the positive prints of the film; and (ii) the expenditure incurred by him in connection with the advertisement of the film.

290. Report of audit of accounts to be furnished under Schedule IX read with section 48 for deduction for tea development account, coffee development account and rubber development account.— The report of audit of the accounts of an assessee, which is required to be furnished under paragraph 2 of Schedule IX to the Act read with section 48, shall be in Form No. 182.

291. Report of audit of accounts to be furnished under Schedule X read with section 49 for deduction for site restoration fund.— The report of audit of the accounts of an assessee, which is required to be furnished under paragraph 2 of Schedule X to the Act read with section 49, shall be in Form No. 183.

292. Investment of fund moneys.– (1) All contributions to a provident fund, whether made by the employer or the employees, or transferred from an individual account of the employee in a recognized provident fund maintained by a former employer, or accrued as interest or otherwise, shall be invested in the instruments given in column 2 of the following Table subject to the percentages given in column 3 thereof: Table Sl. No. Investment Percentage amount to be invested in items referred to in column 2 1 2 3 1. Government Securities and Related Investments. Minimum 45%. 2. Debt Instruments and Related Investments. Minimum 35%. 3. Short-term Debt Instruments and Related Investments. Up to 5%. 4. Equities and Related Investments. Minimum 5%. Asset Backed, Trust Structured and Miscellaneous Up to 5%. 5. Investments. (2) The nature of investments referred to in sub-rule (1) shall have their respective meanings as specified in notification number S.O. 1433(E), dated the 29 th of May, 2015, issued by the Ministry of Labour and Employment, Government of India in this behalf, as amended from time to time, and the said investments shall be subject to such conditions as specified in the said notification. (3) Any funds that are not invested in the manner specified under sub-rule(1) may be deposited into– (i) a Post Office Savings Bank Account in India; or (ii) a current account or Savings Bank Account with any scheduled bank. (4) For the purposes of this rule,— (a) the expression "Government securities" shall have the same meaning as assigned to it in section 2(f) of the Government Securities Act, 2006 (38 of 2006); (b) the manner of investment specified in sub-rule (1) shall apply to the aggregate amount of moneys with the fund in the tax year; (c) moneys received on transfer, maturity or realisation of any security or deposit forming part of a fund or by withdrawal from any account in a bank (including a Post Office Savings Bank Account) shall be deemed to be moneys accruing to the fund; and (d) "scheduled bank" means– (i) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955); or (ii) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959) ; or (iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) ; or (iv) any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).

293. Nomination.– (1) An employee may be permitted by the trustees of the provident fund to nominate one or more persons to receive the amount held in the provident fund in the event of the death of such employee and such nomination shall be made in Form No. 184. (2) If an employee nominates more than one person under sub-rule (1), he shall, specify in his nomination the amount or share payable to each of the nominees in a way that the whole of the amount that may stand to his credit in the provident fund. (3) Where an employee has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family and any nomination made by an employee in favour of a person not belonging to his family shall be invalid. (4) If, at the time of making a nomination, the employee does not have a family, the nomination may be in favour of any person or persons, but if the employee later gains a family, then such nomination shall be invalid and the employee may then make a new nomination in favour of one or more persons from his family. (5) If the nomination is in favour of a minor, whether partly or fully, the member may appoint an adult family member as the guardian of the minor nominee in the event of the death of such member and if, there are no adult family members available, the member may choose any other person to be the guardian of the minor nominee. (6) An employee may modify a nomination at any time by providing written notice to the trustees in Form No. 184 and, if the nominee dies before the employee, the nomination shall revert back to the employee who may then make a new nomination for that interest. (7) A nomination or its modification shall take effect to the extent that it is valid on the date on which it is received by the trustees. (8) For the purposes of this rule, "family" means,– (a) in the case of a male member, his wife, his children, whether married or unmarried, his dependant parents and his deceased son's widow and children; and (b) in the case of a female member, her husband, her children, whether married or unmarried, her dependant parents, her husband's dependant parents and her deceased son's widow and children.

294. Accounts.– (1) The accounts of a provident fund shall be prepared at intervals of not more than twelve months. (2) An account shall be maintained for each subscriber to the fund and it shall include the particulars shown in Part-A of Form No. 185. (3) Where the accounts of a provident fund are kept outside India, certified copies of the accounts shall be supplied not later than the 15th June in each year or any other subsequent date fixed by the Assessing Officer to a local representative of the employer in India. (4) An abstract of the individual account for the tax year of each employee participating in a provident fund shall be furnished by the trustees in Part-B of Form No. 185– (a) to the Assessing Officer of the area in which the accounts of the fund are kept, or if the accounts are kept outside India, to the Assessing Officer of the area in which the local headquarters of the employer are situated; and (b) by the 15th June in each year or any other subsequent date fixed by the Assessing Officer. (5) The account to be made under the provisions of paragraph 11(1) of Part A of Schedule XI to the Act shall show in respect of each employee,– (a) the total salary paid to the employee during the period of his participation in the provident fund; (b) the total contributions; (c) the total interest which has accrued thereon; and (d) so far as may be, the percentage of the salary of the employee in accordance with which contributions have been made by the employer and employee. (6) Every employer shall, as soon as possible, after the close of each financial year, send to each member, a statement of his account in the fund showing the following details: (a) opening balance at the beginning of the period; (b) amount contributed during the year; (c) the total amount of interest credited at the end of the period or debited in the period; and (d) the closing balance at the end of the period.

295. Assigning or creating a charge on beneficial interest in a recognized provident fund.– If an employee assigns or creates a charge on their beneficial interest in a recognised provident fund, the Assessing Officer shall give notice to the employee upon learning of the assignment or charge, which shall inform the employee that if he does not cancel the assignment or charge within two months of receiving the notice, the consideration received for such assignment or charge shall be deemed to be income received by the employee in the tax year in which the Assessing Officer became aware of the situation, and shall be assessed accordingly.

296. Application for recognition.– (1) An application for recognition shall be made by the employer maintaining a provident fund, for which recognition is sought and shall be accompanied by the following documents: — (a) a copy of the original trust deed if any; and (b) a copy of the rules of the fund. (2) The application referred to in sub-rule (1) shall be submitted through the Assessing Officer of:– (a) the area in which the accounts of the fund are kept; or (b) if the accounts are kept outside India the area in which the local headquarters of the employer are situated. (3) The application shall be furnished in Form No. 186 and shall be verified in the manner specified therein. (4) A fund which has been granted recognition on or before 31st March, 2006 and has not applied for recognition thereafter shall make a fresh application in Form No. 186 through the Assessing Officer referred to in sub-rule (2).

297. Order of recognition.– (1) An order according recognition to a provident fund shall take effect from the first day of the month immediately following the month in which the application for recognition is received by the income-tax authority concerned, unless, at the request of the employer, the first day of any later month in the same financial year is specified: (2) In accordance with sub-rule (1), if the approving authority is satisfied that there was sufficient reason for the delay in submitting the application, he may accord recognition to the fund from a date not earlier than the 1st April of the financial year in which the application is made.

298. Withdrawal of recognition.– (1) The approving authority has the right to revoke recognition given to a provident fund if it fails to meet the conditions outlined in Part A of the Fourth Schedule to the Income-tax Act, 1961, as it existed prior to its repeal, or Part A and Part C of Schedule XI to the Act or subsequent conditions set after recognition was granted under the said Act of 1961 and the Act and if the exemption granted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) is withdrawn under sub-section (4) of section 17 of the same Act, the recognition may be withdrawn. (2) Before withdrawing recognition, the approving authority shall give an opportunity to the employer and the trustees of the fund to show cause why recognition should not be withdrawn.

299. Exemption from tax when recognition withdrawn.– If the approving authority withdraws recognition from a provident fund, the balance to the credit of each employee at the end of the financial year before the withdrawal of recognition shall, subject to the provisions of paragraph 9 of Part A of Schedule XI to the Act, be paid to him free of tax at the time when such employee receives the accumulated balance due to him, and the remaining accumulated balance due to him shall be subject to tax as if the fund had never been recognised.

300. Appeal under paragraph 13(1) of Part A of Schedule XI to the Act.– An appeal under paragraph 13(1) of Part A of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹ 1000.

301. Definitions for purposes of rules 302 to 315.– For the purposes of rules 302 to 315 the expressions,– (a) ―approving authority‖ means the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. (b)"beneficiary" means a person referred to in paragraph 3(b) of Part B of Schedule XI to the Act for whom provision of annuity is made; (c) "fund" means a superannuation fund or a part of a superannuation fund which includes a fund, by whatever name called, established or constituted with a sole purpose of making payment of pension or family pension by the employer to his employees; and (d) "trust" means the trust under which the superannuation fund is established and the expression "trustee" means a trustee thereof.

302. Conditions regarding trust and trustees.– (1) The fund and the trust shall be established in India. (2) The trust shall have at least two trustees, provided that a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013) shall not be appointed as a trustee without the prior approval of the approving authority. (3) The trustees of the fund shall be a resident in India and any trustee who leaves India permanently shall vacate his office.

303. Investment of fund moneys.– (1) All moneys contributed to the fund, or received or accrued by way of interest, or otherwise, may be– (a) deposited in a Post Office Savings Bank Account in India; or (b) deposited in a current account or a savings account with any scheduled bank; or (c) utilised in accordance with rule 307 for making payments under a scheme of insurance or for purchase of annuities referred to in that rule; (2) Any funds not deposited or used as mentioned in sub-rule (1) shall be invested in accordance with the notification of the Ministry of Finance, (Department of Financial Services) number F. No. 11/14/2013–PR, dated the 2nd March, 2015 published in the Gazette of India, Extraordinary, Part I, Section 1 as amended from time to time.

304. Admission of directors to a fund.– A director of a company, as defined in section 2(20) of the Companies Act, 2013 (18 of 2013), may only receive benefits from the fund, if he is a whole-time bona fide employee of the company and does not beneficially own shares in the company carrying more than 5% of the total voting power.

305. Ordinary annual contributions.– The yearly contribution of the employer to a fund for each employee shall not exceed 27% of their salary for each year as reduced by any contributions the employer made to a provident fund for the same employee during that year, whether recognised or not.

306. Initial contributions.– For purposes of the deduction allowable under section 29(1)(a), subject to any condition which the Board may think fit to specify, the initial contribution of the employer to a superannuation fund for the past services of an employee shall not exceed the total of 27% of the salary of the employee for each year of past service, as reduced by the contributions of the employer to a provident fund (recognised or unrecognised), if any, for the same employee for each such year.

307. Scheme of insurance or annuity.– (1) For the purpose of providing the annuities for the beneficiaries, the trustees shall— (a) enter into a scheme of insurance with the Life Insurance Corporation established under the Life Insurance Corporation Act, 1956 (31 of 1956) or any other insurer as defined in section 2(58) of the Act; or (b) accumulate the contributions in respect of each beneficiary and purchase an annuity from the said Life Insurance Corporation of India or any other insurer at the time of the retirement or death of each employee, or on his becoming incapacitated prior to retirement. (2) The provisions of sub-rule (1) shall not apply to a fund established or constituted, under an irrevocable trust, which has its sole purpose to make payment of pension or family pension, in accordance with the rules or regulations made under the following enactments:— (a) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970); or (b) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); or (c) the State Bank of India Act, 1955(23 of 1955); or (d) the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); or (e) the National Bank for Agriculture and Rural Development Act, 1981(61 of 1981); or (f) the Industrial Development Bank of India Act, 1964 (18 of 1964); (g) the Export-Import Bank of India Act, 1981(28 of 1981); or (h) the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984); or (i) the Small Industries Development Bank of India Act, 1989(39 of 1989); or (j) the National Housing Bank Act, 1987 (53 of 1987).

308. Commutation of annuity.– Any payment in commutation of annuity shall not exceed— (a) in a case where the employee receives any gratuity, the commuted value of one-third of the annuity which he is normally entitled to receive, and (b) in any other case, the commuted value of one-half of such annuity, 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.

309. Beneficiary not to have any interest in insurance and employer not to have any interest in moneys of fund.– (1) No beneficiary shall have any interest in any insurance policy taken out by the trustees under the rules of a fund and he shall be entitled only to an annuity from the fund. (2) No money belonging to the fund shall be receivable by the employer under any circumstances nor shall the employer have any lien or charge on the fund.

310. Penalty, where employee assigns or charges interest in fund.– Where an employee assigns or creates a charge upon his beneficial interest in a fund, the Assessing Officer shall give notice to the employee that if he does not secure the cancellation of the assignment or charge within two months of the date of receipt of the notice, the consideration received for such assignment or charge shall be deemed to be income received by him in the tax year in which the fact became known to the Assessing Officer and shall be assessed, accordingly.

311. Arrangements on winding up, etc., of business.– When the business of the employer is to be closed or discontinued, the trustees shall, with the prior approval of and subject to the conditions imposed by the approving authority, make suitable arrangements for providing annuities to current employees, or to their widows, children, or dependents in the event of their death.

312. Arrangements for winding up, etc., of fund.– Any arrangements for the winding up of the fund or for its amalgamation with another fund shall be subject to the prior approval of, and subject to such conditions as may be imposed by the approving authority.

313. Application of approval.– Every application for approval of a Superannuation fund under paragraph 4(1) of Part B of Schedule XI to the Act shall be made in Form No. 188 and shall be verified in the manner indicated therein.

314. Amendment of rules, etc., of fund.– No alteration in the rules, constitution, objects or conditions of an approved fund shall be made without the prior approval of the approving authority.

315. Appeal under paragraph 9(1) of Part B of Schedule XI to the Act in case of superannuation fund.– An appeal under paragraph 9(1) of Part B of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹ 1000.

316. Definitions for purposes of rules 317 to 329.– For the purposes of rules 317 to 329, the expressions– (a) ―approving authority‖ means the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. (b) "beneficiary" means a person referred to in paragraph 3(b) of Part B of Schedule XI to the Act for whom provision of gratuity is made; (c) "fund" means a "gratuity fund"; and (d) "trust" means the trust under which the fund is established and the expression "trustee" means a trustee thereof.

317. Conditions regarding trust and trustees.– (1) The fund and the trust shall be established in India. (2) The trust shall have at least two trustees provided that a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013) shall not be appointed as a trustee without the prior approval of the approving authority. (3) The trustees of the fund shall be a resident in India and any trustee who leaves India permanently shall vacate his office.

318. Investment of fund moneys.– (1) All moneys contributed to the fund or received or accrued by way of interest, or otherwise, may be– (a) deposited in a Post Office Savings Bank Account in India; or (b) deposited in a current account or in a savings account with any scheduled bank; or (c) utilised for the purpose of making contributions under Group Gratuity Scheme entered into with the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956) or any other insurer as defined in section 2(58) of the Act; (2) Any funds not deposited or used as mentioned above shall be invested in accordance with the notification of the Ministry of Finance, (Department of Financial Services) number F. No. 11/14/2013–PR, dated the 2nd March, 2015 published in the Gazette of India, Extraordinary, Part I, Section 1, as amended from time to time.

319. Nomination– (1) An employee may be allowed by the trustees of the gratuity fund to make a nomination in Form 184 or in a form as near thereto as may be necessary conferring on one or more persons, the right to receive the amount of gratuity in the event of his death, before that amount becomes payable or, having become payable, has not been paid. (2) If an employee nominates more than one person under sub-rule (1), he shall, in his nomination, specify the amount or share payable to each of the nominees in such manner as to cover the whole of the amount of gratuity that may be payable in the event of his death. (3) Where an employee has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family and any nomination made by such employee in favour of a person not belonging to his family, shall be invalid. (4) If at the time of making a nomination, the employee has no family, the nomination may be in favour of any person or persons, but if the employee subsequently acquires a family, such nomination shall forthwith be deemed to be invalid and the employee may be allowed to make a fresh nomination in favour of one or more persons belonging to his family. (5) A nomination made by an employee may, at any time, be modified by him after giving a written notice to the trustees of his intention of doing so in Form 184 or in a form as near thereto as may be and, if, the nominee predeceases the employee, the interest of the nominee shall revert to the employee, who may thereupon make a fresh nomination in respect of such interest. (6) A nomination or its modification shall take effect to the extent it is valid on the date on which it is received by the trustees. (7) Where the nomination is wholly or partly in favour of a minor, the member may, for the purposes of this rule appoint a major person of his family, to be the guardian of the minor nominee in the event of the member predeceasing the nominee and the guardian so appointed, and where there is no major person in the family, the member may, at his discretion, appoint any other person to be a guardian of the minor nominee. (8) For the purposes of this rule, "family", in relation to an employee, shall be deemed to consist of – (a) in the case of a male employee, himself, his wife, his children, whether married or unmarried, his dependent parents and the dependent parents of his wife and the widow and children of his predeceased son, if any; and (b) in the case of a female employee, herself, her husband, her children, whether married or unmarried, her dependent parents and the dependent parents of her husband and the widow and children of her predeceased son, if any:

320. Admission of directors to a fund.– Where the employer is a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013), a director of the company may be admitted to the benefits of the fund only if he is a whole time bona fide employee of the company and does not beneficially own shares in the company carrying more than 5% of the total voting power.

321. Ordinary annual contributions.– The ordinary annual contribution by the employer to a fund shall be made on a reasonable basis, as may be approved by the approving authority, having regard to the length of service of each 1 employee concerned, but such contribution shall not exceed 8 % of the salary of each employee during each year. 3

322. Initial contributions.– The amount to be allowed as a deduction on account of an initial contribution, which an employer may make in respect of the past services of an employee admitted to the benefits of a fund, shall not exceed 1 8 % of the salary of the employee for each year of his past service with the employer. 3

323. Assigning or creating a charge on beneficial interest in a gratuity fund.– If an employee assigns or creates a charge upon his beneficial interest in a gratuity fund, the Assessing Officer shall give notice to the employee that if he does not secure the cancellation of the assignment or charge within two months of the date of receipt of the notice, the consideration received for such assignment or charge shall be deemed to be income received by him in the tax year in which the fact became known to the Assessing Officer and shall be assessed accordingly.

324. Employer not to have interest in fund moneys.– No money belonging to the fund shall be receivable by the employer under any circumstances nor shall the employer have any lien or charge on the fund.

325. Arrangements for winding up, etc., of business.– Where the trade or undertaking of the employer is to be wound up or discontinued, the trustees shall, with the prior approval of, and subject to such conditions as may be imposed by, approving authority, make satisfactory arrangements for the payment of gratuity to the existing beneficiaries.

326. Arrangements for winding up of the fund.– Any arrangements for the winding up of the fund or for its amalgamation with another fund shall be subject to the prior approval of, and to such conditions as may be imposed by, the approving authority.

327. Application for approval.– The application for approval of a gratuity fund is required to be furnished under paragraph 4(1) of Part B of Schedule XI to the Act shall be made in Form No. 188 and shall be verified in the manner indicated therein.

328. Amendment of rules, etc., of fund.– No alteration in the rules, constitution, objects or conditions of an approved fund shall be made without the prior approval of the approving authority.

329. Appeal under Paragraph 9(1) of Part B of Schedule XI to the Act in case of gratuity fund.– An appeal under paragraph 9(1) of Part B of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹1000.

330. Limits of reserve for unexpired risks.— (1) In the computation of profits and gains for any insurance business other than life insurance, the amount carried over to a reserve for unexpired risks, including any amount carried over to any such additional reserve eligible for deduction under paragraph 4(1)(d) of Schedule XIV to the Act, shall not exceed,— (a) where the insurance business relates to fire insurance or engineering insurance that covers terrorism risks, 100% of the net premium income of such business of the tax year; or (b) where the insurance business relates to fire insurance or miscellaneous insurance, other than those mentioned in clause (a), 50% of the net premium income of such business of the tax year; or (c) where the insurance business relates to marine insurance, 100% of the net premium income of such business of the tax year. (2) Any amount out of the amount carried over to such reserve or additional reserve, which is not allowed as a deduction under this rule in respect of any tax year, shall not be included in the total income for the immediately succeeding tax year in the revenue account relating to which the said amount is credited. (3) In this rule,— (a) "marine insurance" includes the Export Credit Insurance; and (b) "net premium income" refers to the premium amount received as reduced by the reinsurance premium paid during the relevant tax year.