Section 3 — Six kilometres

More than 1000000. Eight kilometres;
( iv) Gold Deposit Bonds issued under the Gold Deposit Scheme,
1999 or deposit certificates issued under the Gold Monetisation
Scheme, 2015 as may be notified by the Central Government,
where,—
( A) “Foreign Institutional Investor” shall have the meaning assigned
to it in section 210(6)(a);
( B) “personal effects” means any movable property (including wearing
apparel and furniture) held for personal use by the assessee or any
family member dependent on him, but excludes—
( I) jewellery, which includes—
( a) ornaments made of gold, silver, platinum, or any other
precious metal or any alloy of such precious metals,
with or without precious or semi-precious stones,
and whether or not worked or sewn into any wearing
apparel; or
( b) precious or semi-precious stones, whether or not set in
any furniture, utensil or other article or worked or sewn
into any wearing apparel; or
( II) archaeological collections; or
( III) drawings; or
( IV) paintings; or
( V) sculptures; or
( VI) any work of art;
( C) “population” shall mean the population according to the last preced-
ing census of which the relevant figures have been published before
the first day of the tax year;
( D) “property” includes any rights in or in relation to an Indian compa-
ny, including rights of management or control or any other rights;
and
( E) “securities” shall have the same meaning as assigned to it in section
2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
( 23) “charitable purpose” includes—
( a) relief of the poor;
( b) education;
( c) yoga;
( d) medical relief;
( e) preservation of environment (including watersheds, forests and
wildlife);
( f) preservation of monuments or places or objects of artistic or historic
interest;
( g) the advancement of any other object of general public utility;
( 24) “Chief Commissioner” means a person appointed to be a Chief Commis-
sioner of Income-tax or a Director General of Income-tax or a Principal
Chief Commissioner of Income-tax or a Principal Director General of
Income-tax under section 237(1);
( 25) “child”, in relation to an individual, includes a step-child and an adopted
child of that individual;
( 26) “Commissioner” means a person appointed to be a Commissioner of
Income-tax or a Director of Income-tax or a Principal Commissioner of
Income-tax or a Principal Director of Income-tax under section 237(1);
(27) “Commissioner (Appeals)” means a person appointed to be a Commis -
sioner of Income-tax (Appeals) under section 237(1);
( 28) “company” means—
( a) any Indian company; or
( b) any body corporate incorporated by or under the laws of a country
outside India; or
( c) any institution, association or body which is or was assessable or
was assessed as a company under the Income-tax Act, 1961, as it
stood immediately before its repeal by this Act (herein referred to
as the Income-tax Act, 1961) (43 of 1961); or
( d) any institution, association or body, whether incorporated or not
and whether Indian or non-Indian, which is declared by order of
the Board to be a company for such period as specified in such
declaration;
( 29) “company in which the public are substantially interested” means—
( a) a company owned by the Government or the Reserve Bank of
India or in which at least 40% of the shares of the company are held
(individually or collectively) by the Government or the Reserve
Bank of India or a corporation owned by that bank; or
( b) a company which is registered under section 8 of the Companies
Act, 2013 (18 of 2013); or
( c) a company having no share capital and if, having regard to its
objects, the nature and composition of its membership and other
relevant considerations, the Board by order declares it to be such
a company for the period as specified in the declaration; or
( d) a mutual benefit finance company, that is to say, a company which
carries on, as its principal business, the business of acceptance
of deposits from its members and which is declared by the Cen -
tral Government under section 406 of the Companies Act, 2013
(18 of 2013), to be a Nidhi or Mutual Benefit Society; or
( e) a company, wherein shares (excluding those entitled to a fixed
rate of dividend, with or without a further right to participate in
profits) carrying not less than 50% of the voting power, have been
unconditionally, allotted to or acquired by, and were beneficially
held throughout the relevant tax year by, one or more co-operative
societies; or
( f) a company which is not a private company as defined in the Com-
panies Act, 2013 (18 of 2013), and either of the following conditions
is fulfilled:—
( i) shares in the company (not being shares entitled to a fixed rate
of dividend, with or without a further right to participate in
profits) were, as on the last day of the relevant tax year, listed
in a recognised stock exchange in India as per the Securities
Contracts (Regulation) Act, 1956 (42 of 1956) and any rules
made thereunder;
( ii) shares in the company (not being those entitled to a fixed rate
of dividend, with or without a further right to participate in
profits) carrying not less than 50% of the voting power, have
been unconditionally, allotted to or acquired by, and were
beneficially held throughout the relevant tax year by—
( A) the Government; or
( B) a corporation established by a Central Act or State Act
or Provincial Act; or
( C) any company to which this clause applies or any sub -
sidiary company of such company, if the entire share
capital of such subsidiary company has been held by
the parent company or by its nominees throughout the
tax year,
so, however, that in respect of an Indian company whose business
consists mainly in the construction of ships or in the manufacture
or processing of goods or in mining or in the generation or dis -
tribution of electricity or any other form of power, the expression
“not less than 50%” shall be read as if the expression “not less than
40%” had been substituted;
( 30) “convertible foreign exchange” means foreign exchange which is treated
by the Reserve Bank of India as convertible foreign exchange for the
purposes of the Foreign Exchange Management Act, 1999 (42 of 1999),
and any rules made thereunder or any other corresponding law;
( 31) “co-operative bank” shall have the same meaning as specified in Part V
of the Banking Regulation Act, 1949 (10 of 1949);
1[(32) “co-operative society” means a co-operative society registered under the
Co-operative Societies Act, 1912 (2 of 1912), or the Multi-State Co-operative
Societies Act, 2002 (39 of 2002), or under any other law in force in any
State or Union territory for the registration of co-operative societies;]
( 33) “currency” shall have the same meaning as assigned to it in section 2(h)
of the Foreign Exchange Management Act, 1999 (42 of 1999);
( 34) “demerged company” means the company whose undertaking is trans -
ferred, pursuant to a demerger, to a resulting company;
( 35) “demerger”, in relation to companies, means the transfer, pursuant to
a scheme of arrangement under sections 230 to 232 of the Companies
Act, 2013 (18 of 2013), by a demerged company of its one or more
undertakings to any resulting company in such a manner that—
( a) all the property of the undertaking, being transferred by the
demerged company, immediately before the demerger, becomes
the property of the resulting company by virtue of the demerger;
( b) all the liabilities relatable to the undertaking, being transferred by
the demerged company, immediately before the demerger, become
the liabilities of the resulting company by virtue of the demerger;
( c) the property and the liabilities of the undertaking or undertakings
being transferred by the demerged company are transferred at
values appearing in its books of account immediately before the
demerger, except in compliance to the Indian Accounting Stand -
1. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, clause ( 32)
read as under :
‘( 32) “co-operative society” means a co-operative society registered under the Co-operative
Societies Act, 1912 (2 of 1912), or under any other law in force in any State or Union
territory for the registration of co-operative societies;’
ards specified in Annexure to the Companies (Indian Accounting
Standards) Rules, 2015 made under the Companies Act, 2013
(18 of 2013);
( d) the resulting company issues, in consideration of the demerger,
its shares to the shareholders of the demerged company on a pro-
portionate basis, except where the resulting company itself is a
shareholder of the demerged company;
( e) the shareholders holding not less than three-fourths in value of the
shares in the demerged company (other than shares already held
therein immediately before the demerger, or by a nominee for, the
resulting company or, its subsidiary) become shareholders of the
resulting company or companies by virtue of the demerger, other-
wise than as a result of the acquisition of the property or assets of
the demerged company or any undertaking thereof by the resulting
company;
( f) the transfer of the undertaking is on a going concern basis; and
( g) the demerger is as per the conditions, if any, notified under section
116(7) by the Central Government,
where,—
( i) “undertaking” shall include any part of an undertaking, or a unit or
division of an undertaking or a business activity taken as a whole,
but does not include individual assets or liabilities or any combi -
nation thereof not constituting a business activity;
( ii) “liabilities relatable to the undertaking”, referred to in sub-clause
(b), shall include—
( A) the liabilities which arise out of the activities or operations
of the undertaking;
( B) the specific loans or borrowings (including debentures)
raised, incurred and utilised solely for the activities or oper-
ations of the undertaking; and
( C) the amount “N”, being the amount of general or multipurpose
borrowings of the undertaking, as computed below, in cases
other than those referred to in item (A) or (B),—

N= K L
M× 



where,—
K = the amount of general or multipurpose borrowings
of the demerged company;
L = the value of the assets transferred in a demerger;
and
M = the total value of the assets of such demerged com-
pany immediately before the demerger;
( iii) any change in the value of assets consequent to their revaluation
shall be ignored for determining the value of the property referred
to in sub-clause (c);
( iv) the splitting up or the reconstruction of any authority or a body
constituted or established under a Central Act or State Act or Pro-
vincial Act, or a local authority or a public sector company, into
separate authorities or bodies or local authorities or companies,
as the case may be, shall be deemed to be a demerger if it fulfils
such conditions as the Central Government may, by notification,
specify;
(v) the reconstruction or splitting up of a company, which ceased to be
a public sector company as a result of transfer of its shares by the
Central Government, into separate companies, shall be deemed to
be a demerger, if it has been made to give effect to any condition
attached to the said transfer of shares and also fulfils such other
conditions as the Central Government may, by notification, specify;
( vi) the reconstruction or splitting up of a public sector company into
separate companies shall be deemed to be a demerger, if it has
been made to transfer any asset of the demerged company to the
resulting company and the resulting company—
( A) is a public sector company on the appointed day indicated
in such scheme approved by the Central Government or
any other body authorised under the Companies Act, 2013
(18 of 2013) or any other applicable law governing such
public sector companies; and
( B) fulfils such other conditions as the Central Government may,
by notification, specify in this behalf;
( 36) “Deputy Commissioner” means a person appointed to be a Deputy
Commissioner of Income-tax under section 237(1);
( 37) “Deputy Director” means a person appointed to be a Deputy Director of
Income-tax under section 237(1);
( 38) “director” and “manager”, in relation to a company, shall have the same
meanings as respectively assigned to them in section 2( 34) and (53) of
the Companies Act, 2013 (18 of 2013);
( 39) “Director General or Director” means a person appointed to be a Direc-
tor General of Income-tax or a Director of Income-tax, under section
237(1), and includes a Principal Director General or a Principal Director
or an Additional Director or a Joint Director or a Deputy Director or an
Assistant Director;
( 40) “dividend” includes—
( a) any distribution by a company of accumulated profits, whether
capitalised or not, if such distribution entails the release by the
company to its shareholders of all or any part of the assets of the
company;
( b) any distribution to its shareholders by a company of debentures,
debenture-stock, or deposit certificates in any form, with or with-
out interest, and any distribution to its preference shareholders
of shares by way of bonus, to the extent to which the company
possesses accumulated profits, whether capitalised or not;
( c) any distribution made to the shareholders of a company on its
liquidation, to the extent to which the distribution is attributable
to the accumulated profits of the company immediately before its
liquidation, whether capitalised or not;
( d) any distribution to its shareholders by a company on the reduction
of its capital, to the extent to which the company possesses accu -
mulated profits, whether capitalised or not;
( e) any payment by a company, not being a company in which the public
are substantially interested, of any sum (whether as representing a
part of the assets of the company or otherwise),—
( i) as an advance or loan to a shareholder, being a person who is
the beneficial owner of shares (not being shares entitled to a
fixed rate of dividend, with or without a right to participate
in profits) holding not less than 10% of the voting power; or
( ii) as an advance or loan to any concern in which such shareholder
is a member or a partner and in which he has a substantial
interest (herein referred to as the said concern); or
( iii) made on behalf, or for the individual benefit, of any such
shareholder,
to the extent to which the company in either case possesses accu-
mulated profits;
( f) 2[***]
but does not include—
( i) a distribution made under sub-clause ( c) or (d) in respect of any
share issued for full cash consideration, where the holder of the
share is not entitled in the event of liquidation to participate in the
surplus assets;
( ii) any advance or loan made to a shareholder or the said concern by
a company in the ordinary course of its business, where the lending
of money is a substantial part of the business of the company;
( iii) any dividend paid by a company which is set off by the company
against the whole or any part of any sum previously paid by it and
treated as a dividend within the meaning of sub-clause ( e), to the
extent to which it is so set off;
( iv) any distribution of shares pursuant to a demerger by the resulting
company to the shareholders of the demerged company (whether
or not there is a reduction of capital in the demerged company);
2. Omitted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its omission, sub-clause (f) read
as under :
‘( f) any payment by a company on purchase of its own shares from a shareholder as per
section 68 of the Companies Act, 2013 (18 of 2013),’
3[(v) any advance or loan between two group entities, where,—
( A) one of the group entities is a “Finance Company” or a “Finance
Unit”;
( B) the other group entity to the transaction is located in a country
or territory outside India; and
( C) the parent entity or the principal entity of such group is listed
on the stock exchange in a country or territory outside India,
for the purposes of items (B) and (C), the country or territory outside
India shall be specified by the Central Government, by notification,]
where,—
( A) “accumulated profits” for the purposes of—
( I) sub-clauses (a), (b), (d) and (e), shall include all profits of the
company up to the date of distribution or payment referred
to in those sub-clauses;
( II) sub-clause (c), shall include all profits of the company up to
the date of liquidation, but shall not, where the liquidation is
consequent on the compulsory acquisition of its undertaking
by the Government or a corporation owned or controlled by
the Government under any law in force, include any profits
of the company before three successive tax years immediately
preceding the tax year in which such acquisition took place;
( B) in respect of an amalgamated company, the accumulated profits,
whether capitalised or not, or loss, as the case may be, shall be
increased by the accumulated profits, whether capitalised or not,
of the amalgamating company on the date of amalgamation;
( C) “concern” means a Hindu undivided family or a firm or an associ-
ation of persons or a body of individuals or a company;
( D) a person shall be deemed to have a substantial interest in a concern,
other than a company, if he is, at any time during the tax year, bene-
ficially entitled to not less than 20% of the income of such concern;
( E) for the purposes of sub-clause (v),—
( I) “Finance Company” and “Finance Unit” shall have the same
meaning as respectively assigned to them in regulation 2(1)
(e) and ( f) of the International Financial Services Centres
Authority (Finance Company) Regulations, 2021 made under
the International Financial Services Centres Authority Act,
3. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, sub-clause
(v) read as under :
‘( v) any advance or loan between two group entities, where,—
( A) one of the group entity is a “Finance Company” or a “Finance Unit”; and
( B) the parent entity or principal entity of such group is listed on stock exchange
in a country or territory outside India other than the country or territory
outside India as specified by the Board in this behalf,’
2019 (50 of 2019), and is set up as a global or regional cor -
porate treasury centre for undertaking treasury activities or
treasury services as per the relevant regulations made by the
International Financial Services Centres Authority established
under section 4 of the said Act;
3a[(II) “group entity” shall have the same meaning as assigned to the
expression “group entities” in clause (m) of sub-regulation (1)
of regulation 2 of the International Financial Services Authority
(Payment Services) Regulations, 2024 made under the Inter -
national Financial Services Centres Authority Act, 2019 (50 of
2019);
( III) “parent entity” or “principal entity” in relation to one or more
other group entities, shall be an entity of which other group
entities are subsidiary and such entity,—
( a) exercises or controls more than one-half of the total voting
power either at its own or together with one or more of its
subsidiaries; or
( b) controls the composition of the Board of Directors;]
( 41) “document” includes an electronic record as defined in section 2(1)(t) of
the Information Technology Act, 2000 (21 of 2000);
( 42) “domestic company” means—
( i) an Indian company; or
( ii) any other company which has made the prescribed arrangements
within India for the declaration and payment of the dividends
(including dividends on preference shares) payable out of its income
liable to tax under this Act;
( 43) “electoral trust” means a trust so approved by the Board as per the scheme
made by the Central Government;
( 44) “fair market value”, in relation to a capital asset, means—
( a) the price that the capital asset would ordinarily fetch on sale in the
open market on the relevant date; and
( b) where the price referred to in sub-clause ( a) is not ascertainable,
such price as determined in the manner, as may be prescribed;
( 45) “firm” shall have the same meaning as assigned to it in section 4 of the
Indian Partnership Act, 1932 (9 of 1932), and shall include a “limited
liability partnership” as defined in section 2(1)(n) of the Limited Liability
Partnership Act, 2008 (6 of 2009);
( 46) “foreign company” means a company which is not a domestic company;
( 47) “foreign currency” shall have the same meaning as assigned to it in
section 2( m) of the Foreign Exchange Management Act, 1999 (42 of
1999);
3a. Items (II) and (III) substituted for item (II) by the Finance Act, 2026, w.e.f. 1-4-2026. Prior
to its substitution, item (II) read as under :
‘( II) “group entity”, “parent entity” and “principal entity” shall be such entities which
satisfy such conditions as may be prescribed in this behalf;’
( 48) “hearing” includes communication of data and documents through
electronic mode;
( 49) “income” includes—
( a) profits and gains;
( b) dividend;
( c) voluntary contributions received by—
( i) a registered non-profit organisation; or
( ii) an association referred to in Schedule III (Table: Sl. No. 23);
or
( iii) any University or other educational institution or any hospital
or other institution referred to in Schedule VII (Table: Sl. No.
19); or
( iv) an electoral trust;
( d) the value of any perquisite or profit in lieu of salary taxable under
sections 17 and 18;
( e) any special allowance or benefit, other than perquisite included
under sub-clause (d), specifically granted to the assessee to meet
expenses wholly, necessarily and exclusively for the performance
of the duties of an office or employment of profit;
( f) any allowance granted to the assessee either to meet his personal
expenses at the place where the duties of his office or employment
of profit are ordinarily performed by him or at a place where he
ordinarily resides or to compensate him for the increased cost of
living;
( g) the value of any benefit or perquisite, whether convertible into
money or not, obtained from a company, either by a director or
by a person who has a substantial interest in the company, or by
a relative of the director or such person, and any sum paid by any
such company in respect of any obligation which, but for such
payment, would have been payable by the director or that person;
( h) the value of any benefit or perquisite, whether convertible into
money or not, obtained by any representative assessee mentioned
in section 303(1)( c) or ( d) or by any person on whose behalf or
for whose benefit any income is receivable by the representative
assessee (such person being herein referred to as the beneficiary),
and any sum paid by the representative assessee in respect of any
obligation which, but for such payment, would have been payable
by the beneficiary;
( i) any sum chargeable to income-tax under—
( A) section 26(2)(b) or (c) or (d) or section 38 or 95;
( B) section 26(2)(e) or (g);
( j) the value of any benefit or perquisite taxable under section
26(2)(f);
( k) any capital gains chargeable under section 67;
( l) the profits and gains of any business of insurance carried on by a
mutual insurance company or by a co-operative society, computed
as per section 55 or any surplus taken to be such profits and gains
as per Schedule XIV;
( m) the profits and gains of any business of banking (including provid-
ing credit facilities) carried on by a co-operative society with its
members;
( n) any winnings from lotteries, crossword puzzles, races including
horse races, card games and other games of any sort or from gam-
bling or betting of any form or nature;
( o) any sum received by the assessee from his employees as contribu-
tions to any provident fund or superannuation fund or any fund
set up under the provisions of the Employees’ State Insurance
Act, 1948 (34 of 1948), or any other fund for the welfare of such
employees;
( p) any sum received under a Keyman insurance policy including the
sum allocated by way of bonus on such policy;
( q) any sum referred to in section 26(2)(h);
( r) the fair market value of inventory referred to in section 26(2)(j);
( s) any sum referred to in section 92(2)(k) or (l);
( t) any sum of money referred to in section 92(2)(h);
( u) any sum of money or value of property referred to in section
92(2)(m);
( v) any compensation or other payment referred to in section
92(2)(j);
( w) assistance in the form of a subsidy or grant or cash incentive or duty
drawback or waiver or concession or reimbursement (by whatever
name called) by the Central Government or a State Government
or any authority or body or agency, in cash or kind, to the assessee
other than—
( i) the subsidy or grant or reimbursement which is taken into
account for determination of the actual cost of the asset as
per section 39(1)(d) and (3); or
( ii) the subsidy or grant by the Central Government for the pur-
pose of the corpus of a trust or institution established by the
Central Government or a State Government,
where,—
( A) “card game and other game of any sort” includes any game show,
an entertainment programme on television or electronic mode, in
which people compete to win prizes or any other similar game;
( B) “Keyman insurance policy” shall have the meaning assigned to it
in Schedule II (Note 1);
( C) “lottery” includes winnings from prizes awarded to any person by
draw of lots or by chance or in any other manner, under any scheme
or arrangement, called by any name;
( 50) “Income Computation and Disclosure Standards” means such standards
as may be notified under section 276(2);
( 51) “Income-tax Officer” means a person appointed to be an Income-tax
Officer under section 237(1);
( 52) “India” means the territory of India as referred to in article 1 of the
Constitution, its territorial waters, seabed and sub-soil underlying such
waters, continental shelf, exclusive economic zone or any other maritime
zone as referred to in the Territorial Waters, Continental Shelf, Exclusive
Economic Zone and Other Maritime Zones Act, 1976 (80 of 1976), and
the air space above its territory and territorial waters;
( 53) “Indian company” means a company formed and registered under the
Companies Act, 2013 (18 of 2013) and includes—
( a) company formed and registered under any law relating to companies
formerly or currently in force in any part of India; or
( b) corporation established by or under a Central Act or State Act or
Provincial Act; or
( c) institution or association or body which is declared by the Board
to be a company under clause (28),
the registered or principal office of which is in India;
( 54) “Indian currency” shall have the same meaning as assigned to it in
section 2( q) of the Foreign Exchange Management Act, 1999 (42 of
1999);
( 55) “infrastructure capital company” means a company which makes invest-
ments by acquiring shares or providing long-term finance to—
( a) any enterprise or undertaking wholly engaged in the business
referred to in section 80-IA(4) or 80-IAB(1) of the Income-tax Act,
1961 (43 of 1961); or
( b) an undertaking developing and building—
( i) a housing project referred to in section 80-IB(10) of the
Income-tax Act, 1961 (43 of 1961); or
( ii) a project for constructing a hotel of not less than three star
category as classified by the Central Government; or
( iii) a project for constructing a hospital with at least one hundred
beds for patients;
( 56) “infrastructure capital fund” means a fund operating under a trust deed
registered under the Registration Act, 1908 (16 of 1908) established to
raise moneys by the trustees for investment by acquiring shares or pro-
viding long-term finance to enterprises or undertakings referred to in
clause (55);
( 57) “Inspector of Income-tax” means a person appointed to be an Inspector
of Income-tax under section 237(1);
( 58) “insurer” means an insurer, being an Indian insurance company, as
defined under section 2( 7A) of the Insurance Act, 1938 (4 of 1938),
which has been granted a certificate of registration under section 3 of
that Act;
( 59) “interest” means interest payable in any manner for moneys borrowed
or debt incurred (including a deposit, claim or other similar right or
obligation) and includes service fee or any other charges for the moneys
borrowed or debt incurred or for any credit facility that has not been
utilised;
( 60) “interest on securities” means—
( a) interest on any security of the Central Government or a State Gov-
ernment;
( b) interest on debentures or other securities for money issued by or
on behalf of a local authority or a company or a corporation estab-
lished by a Central Act or State Act or Provincial Act;
( 61) “International Financial Services Centre” shall have the same meaning
as assigned to it in section 2(q) of the Special Economic Zones Act, 2005
(28 of 2005);
( 62) “Joint Commissioner” means a person appointed to be a Joint Com -
missioner of Income-tax or an Additional Commissioner of Income-tax
under section 237(1);
( 63) “Joint Commissioner (Appeals)” means a person appointed to be a Joint
Commissioner of Income-tax (Appeals) or an Additional Commissioner
of Income-tax (Appeals) under section 237(1);
( 64) “Joint Director” means a person appointed to be a Joint Director of
Income-tax or an Additional Director of Income-tax under section
237(1);
( 65) “legal representative” shall have the same meaning as assigned to it in
section 2(11) of the Code of Civil Procedure, 1908 (5 of 1908);
( 66) “liable to tax”, in relation to a person and with reference to a country,
means that there is an income-tax liability on such person under the law
of that country for the time being in force and shall include a person
who has subsequently been exempted from such liability under the law
of that country;
( 67) “long-term capital asset” means a capital asset which is not a short-term
capital asset;
( 68) “long-term capital gain” means capital gains arising from the transfer of
a long-term capital asset;
( 69) “manufacture”, with its grammatical variations and cognate
expressions, means a change in a non-living physical object or article
or thing—
( a) resulting in transformation of the object or article or thing into a
new and distinct object or article or thing having a different name,
character and use; or
( b) bringing into existence of a new and distinct object or article or
thing with a different chemical composition or integral structure;
( 70) “maximum marginal rate” means the rate of income-tax (including
surcharge on income-tax) applicable in relation to the highest slab of
income for an individual, association of persons or, as the case may be,
body of individuals, as specified in the Finance Act of the relevant year;
( 71) “non-banking financial company” shall have the same meaning as
assigned to it in section 45-I( f) of the Reserve Bank of India Act, 1934
(2 of 1934);
( 72) “non-resident” means a person who is not a “resident”, and for the purpos-
es of sections 161, 174 and 312, includes a person who is not ordinarily
resident as per section 6(13);
( 73) “notification” means a notification published in the Official Gazette
and the expression “notify” with its grammatical variations and cognate
expressions shall be construed accordingly;
( 74) “partner” shall have the same meaning as assigned to it in section 4 of
the Indian Partnership Act, 1932 (9 of 1932), and shall include—
( a) any person who, being a minor, has been admitted to the benefits
of partnership; and
( b) a partner of a limited liability partnership as defined in section
2(1)(q) of the Limited Liability Partnership Act, 2008 (6 of 2009);
( 75) “partnership” shall have the same meaning as assigned to it in section
4 of the Indian Partnership Act, 1932 (9 of 1932), and shall include a
“limited liability partnership” as defined in section 2(1)(n) of the Limited
Liability Partnership Act, 2008 (6 of 2009);
( 76) “Permanent Account Number (PAN)” means a unique number consisting
of ten alphanumeric characters, allotted by the Assessing Officer to a
person for the purpose of identification under this Act, and includes a
Permanent Account Number allotted under the new series;
( 77) “person” includes—
( a) an individual;
( b) a Hindu undivided family;
( c) a company;
( d) a firm;
( e) an association of persons or a body of individuals, whether incor-
porated or not;
( f) a local authority; and
( g) every artificial juridical person, not falling within any of the
preceding sub-clauses,
whether or not such an association of persons or a body of individuals or
a local authority or an artificial juridical person was formed or established
or incorporated with the object of deriving income, profits, or gains;
( 78) “person of Indian origin” means an individual who or either of his
parents or any of his grand-parents, was born in undivided India;
( 79) “person who has a substantial interest in the company”, in relation to
a company means a person who is the beneficial owner of shares, not
being shares entitled to a fixed rate of dividend, whether with or without
a right to participate in profits, carrying not less than 20% of the voting
power;
( 80) “prescribed” means prescribed by rules made under this Act;
( 81) “Principal Chief Commissioner” means a person appointed to be a Prin-
cipal Chief Commissioner of Income-tax under section 237(1);
( 82) “Principal Commissioner” means a person appointed to be a Principal
Commissioner of Income-tax under section 237(1);
( 83) “Principal Director” means a person appointed to be a Principal Director
of Income-tax under section 237(1);
( 84) “Principal Director General” means a person appointed to be a Principal
Director General of Income-tax under section 237(1);
( 85) “principal officer”, with reference to a local authority or a company
or any other public body or any association of persons or any body of
individuals, means—
( a) the secretary, treasurer, manager or agent of the authority,
company, association or body; or
( b) any person connected with the management or administration of
the local authority, company, association or body upon whom the
Assessing Officer has served a notice of his intention of treating
him as the principal officer thereof;
( 86) “profession” includes vocation;
( 87) “public sector bank” means the State Bank of India constituted under
the State Bank of India Act, 1955 (23 of 1955), 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) and a bank included in the category “other public
sector banks” by the Reserve Bank of India;
( 88) “public sector company” means any corporation established by or under
any Central Act or State Act or Provincial Act or a Government company
as defined in section 2(45) of the Companies Act, 2013 (18 of 2013);
( 89) “public servant” shall have the same meaning as assigned to it in section
2(28) of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023);
( 90) “rate or rates in force” or “rates in force”, in relation to a tax year, for the
purposes of—
( a) ( i) computing the income-tax chargeable under section 316(5)
or 317(2) or 319 or 320(2); or
( ii) deducting income-tax under section 392(1) to (6) from
income chargeable under the head “Salaries”; or
( iii) computing the advance tax payable under Chapter XIX-C
in a case not falling under section 207 or 194(1) (Table: Sl.
No. 1) or 194(1)(Table: Sl. No. 6) or 214 or 307 or 308 or 311; or
( iv) deducting tax under section 393(1) [Table: Sl. No. 1(i)], [Table:
Sl. No. 5(i)], [Table: Sl. No. 5( ii)], [Table: Sl. No. 5( iii)] and
(Table: Sl. No. 7) or in section 393(3)(Table: Sl. No. 1), (Table:
Sl. No. 2) and (Table: Sl. No. 3),
means the rate or rates of income-tax specified in this behalf in the
Finance Act of the relevant year;
( b) computing the advance tax payable under Chapter XIX-C in a
case falling under section 207 or 194(1) (Table: Sl. No. 1) or 194(1)
(Table: Sl. No. 6) or 214 or 307 or 308 or 311 the rate or rates
specified in the said respective section, or the rate or rates of
income-tax specified in this behalf in the Finance Act of the relevant
tax year, whichever is applicable;
( c) deducting tax under section 393(2) (Table: Sl. No. 6), (Table: Sl.
No. 7), (Table: Sl. No. 8), (Table: Sl. No. 9) and (Table: Sl. No. 17),
the rate or rates of income-tax specified in this behalf in the
Finance Act of the relevant tax year or the rate or rates of income-tax
specified in an agreement entered into by the Central Government
under section 159(1), or an agreement notified by the Central Gov-
ernment under section 159(2), whichever is applicable;
( 91) “recognised provident fund” means a provident fund which has been
and continues to be recognised by the approving authority as per Part A
of the Schedule XI, and includes a provident fund established under a
scheme framed under the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 (19 of 1952);
( 92) “recognised stock exchange” means a recognised stock exchange as
referred to in section 2( f) of the Securities Contracts (Regulation) Act,
1956 (42 of 1956) and which fulfils such conditions, as may be prescribed,
and notified by the Central Government for this purpose;
( 93) “regular assessment” means the assessment made under section
270(10) or 271;
( 94) “relative”, in relation to an individual, means the husband, wife, brother,
sister or any lineal ascendant (maternal as well as paternal) or descendant
of that individual;
( 95) “Reserve Bank of India” means the Bank constituted under section 3(1)
of the Reserve Bank of India Act, 1934 (2 of 1934);
( 96) “resident” means a person who is resident in India as per section 6;
( 97) “resulting company” means one or more companies (including a wholly
owned subsidiary thereof) to which the undertaking of the demerged
company is transferred in a demerger and, the resulting company in
consideration of such transfer of undertaking, issues shares to the share-
holders of the demerged company and includes any authority or body
or local authority or public sector company or a company established,
constituted or formed as a result of demerger;
( 98) “scheduled bank” shall have the same meaning as assigned to it in section
2(e) of the Reserve Bank of India Act, 1934 (2 of 1934);
( 99) “Securities and Exchange Board of India” shall have the same meaning
as assigned to it in section 2(1)(a) of the Securities and Exchange Board
of India Act, 1992 (15 of 1992);
( 100) “senior citizen” means an individual resident in India who is of the age
of sixty years or more at any time during the relevant tax year;
( 101) ( a) “short-term capital asset” means a capital asset held by an assessee
for not more than twenty-four months immediately preceding the
date of its transfer; and
( b) where the capital asset is a—
( i) security listed in a recognised stock exchange in India; or
( ii) unit of the Unit Trust of India; or
( iii) unit of an equity-oriented fund; or
( iv) zero-coupon bond,
the provisions of sub-clause (a) shall have effect, as if for the words
“twenty-four months”, the words “twelve months” had been substi-
tuted; and
( c) in determining the period for which capital asset is held by the
assessee,—
( A) in the case of a share held in a company in liquidation, there
shall be excluded the period subsequent to the date on which
the company goes into liquidation;
( B) there shall be included the period for which—
( I) the asset was held by the previous owner referred to in
section 73(1)(Table: Sl. No. 1), for a capital asset which
becomes the property of the assessee in the circum-
stances mentioned in the said section;
( II) the share or shares in the amalgamating company were
held by the assessee, for a capital asset being a share
or shares in an Indian company, which becomes the
property of the assessee in consideration of a transfer
referred to in section 70(1)(f);
( III) the share or shares held in the demerged company were
held by the assessee, for a capital asset being a share
or shares in an Indian company, which becomes the
property of the assessee in consideration of a demerger;
( IV) the person was a member of a recognised stock exchange
in India immediately before its demutualisation or cor-
poratisation, for a capital asset, being trading or clearing
rights of that recognised stock exchange, acquired by a
person pursuant to such demutualisation or corporati-
sation of that recognised stock exchange;
( V) the person was a member of a recognised stock exchange
in India immediately before its demutualisation or corpo-
ratisation, for a capital asset being equity share or shares
in a company allotted pursuant to such demutualisation
or corporatisation of that recognised stock exchange;
( VI) the share or shares were held by the assessee, for a capital
asset being a unit of a business trust, allotted pursuant
to transfer of share or shares as referred to in section
70(1)(zi);
( VII) the unit or units in the consolidating scheme of a
mutual fund were held by the assessee, for a capital
asset being a unit or units, which becomes the property
of the assessee in consideration of a transfer referred to
in section 70(1)(zj);
( VIII) the preference shares were held by the assessee, for a
capital asset being equity shares in a company, which
becomes the property of the assessee in consideration
of a transfer referred to in section 70(1)(zb);
( IX) the unit or units in the consolidating plan of a mutual
fund scheme were held by the assessee, for a capital
asset being a unit or units, which becomes the property
of the assessee in consideration of a transfer referred to
in section 70(1)(zk);
( X) the original unit or units in the main portfolio were held
by the assessee, for a capital asset being a unit or units
in a segregated portfolio referred to in section 73(1)
(Table: Sl. No. 11);
( XI) gold was held by the assessee before conversion into
the Electronic Gold Receipt, for a capital asset being
Electronic Gold Receipt issued in respect of such gold
deposited as referred to in section 70(1)(y);
( XII) Electronic Gold Receipt was held by the assessee before
its conversion into gold for a capital asset being gold
released in respect of such Electronic Gold Receipt as
referred to in section 70(1)(y);
(C) there shall be reckoned, the period from—
( I) the date of its conversion or treatment, for a capital asset
referred to in section 26(2)(j);
( II) the date of allotment of a share or any other security
(herein referred to as the financial asset), for a capital
asset being such financial asset subscribed to by the
assessee on the basis of his right to subscribe to such
financial asset or subscribed to by the person in whose
favour the assessee has renounced his right to subscribe
to such financial asset;
( III) the date of the offer of the right to subscribe to any
financial asset which is renounced in favour of any
other person by the company or institution, as the case
may be, making such offer, for a capital asset, being
such right;
( IV) the date of the allotment of a financial asset allotted
without any payment and on the basis of holding of
any other financial asset, for a capital asset being such
financial asset;
( V) the date of allotment or transfer of any specified security
or sweat equity shares allotted or transferred, directly
or indirectly, by the employer free of cost or at conces-
sional rate to his employees (including former employee
or employees), for a capital asset being such specified
security or sweat equity shares;
( VI) the date on which a request for the redemption was
made, for a capital asset, being share or shares of a
company, which is acquired by the non-resident assessee
on redemption of Global Depository Receipts referred
to in section 209(1)(Table: Sl. No. 2) held by such assessee;
( D) for capital assets other than those mentioned in items (A) to
(C), the said period shall be determined in such manner, as
may be prescribed,
where,—
( A) “equity oriented fund” shall have the meaning assigned to it
in section 198(8);
( B) “security” shall have the same meaning as assigned to it in
section 2(h) of the Securities Contracts (Regulation) Act, 1956
(42 of 1956);
( C) “specified security” means the securities as defined in section
2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of
1956) and, where employees’ stock option has been granted
under any plan or scheme therefor, includes the securities
offered under such plan or scheme;
( D) “sweat equity shares” means equity shares issued by a company
to its employees or directors at a discount or for consideration
other than cash for providing know-how or making available
rights in the nature of intellectual property rights or value
additions, by whatever name called;
( 102) “short-term capital gain” means capital gains arising from the transfer
of a short-term capital asset;
( 103) ( a) “slump sale” means the transfer of one or more undertaking, by
any means, for a lump sum consideration without values being
assigned to the individual assets and liabilities in such transfer;
( b) for the purpose of sub-clause (a)—
( i) “undertaking” shall have the meaning assigned to it in clause
(35)(i); and
( ii) the determination of the value of an asset or liability for the
sole purpose of payment of stamp duty, registration fees or
other similar taxes or fees shall not be regarded as assignment
of values to individual assets or liabilities;
( 104) “Special Economic Zone” shall have the same meaning as assigned to it
in section 2(za) of the Special Economic Zones Act, 2005 (28 of 2005);
( 105) “stamp duty value” means the value adopted or assessed or assessable
by any authority of the Central Government or State Government for
the payment of stamp duty in respect of an immovable property, where
the expression “assessable” shall mean the value which any authority of
that Government would have adopted or assessed as if it were referred
to such authority for the purposes of payment of stamp duty, irrespective
of anything to the contrary contained in any other law in force;
( 106) “tax” means income-tax chargeable under this Act;
( 107) “Tax Recovery Officer” means an Income-tax Officer authorised in writing
by the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner, to exercise—
( a) the powers of a Tax Recovery Officer; and
( b) the powers and functions conferred on, or assigned to, an Assessing
Officer under this Act, and as may be prescribed;
( 108) “total income” means the total amount of income referred to in section
5, computed in the manner as laid down in this Act;
( 109) “transfer” in relation to a capital asset, includes—
( a) the sale, exchange or relinquishment of the asset; or
( b) the extinguishment of any rights therein; or
( c) the compulsory acquisition thereof under any law in force; or
( d) where the asset is converted by the owner into, or is treated by him
as, stock-in-trade of a business carried on by him, such conversion
or treatment; or
( e) the maturity or redemption of a zero coupon bond; or
( f) any transaction (whether by way of becoming a member of, or
acquiring shares in, a co-operative society, company or other asso-
ciation of persons or by way of any agreement or any arrangement
or in any other manner) which has the effect of transferring, or
enabling the enjoyment of, any immovable property; or
( g) any transaction involving the allowing of the possession of any
immovable property to be taken or retained in part performance of
a contract of the nature referred to in section 53A of the Transfer
of Property Act, 1882 (4 of 1882); or
( h) disposing of, or parting with, an asset or any interest therein, or
creating any interest in any asset in any manner, directly or indirect-
ly, absolutely or conditionally, voluntarily or involuntarily, by way
of an agreement (whether entered into in India or outside India)
or otherwise, irrespective of whether such transfer of rights has
been characterised as being effected or dependent upon or flowing
from the transfer of a share or shares of a company registered or
incorporated outside India,
where, the expression “immovable property” means—
( i) any land or any building or part of a building, and includes, where
any land or any building or part of a building is to be transferred
together with any machinery, plant, furniture, fittings or other
things, such machinery, plant, furniture, fittings or other things
also, such that the land, building, part of a building, machin -
ery, plant, furniture, fittings and other things include any rights
therein;
( ii) any rights in or with respect to any land or any building or a part of
a building (whether or not including any machinery, plant, furniture,
fittings or other things therein), which has been constructed or
which is to be constructed, accruing or arising from any transaction
(whether by way of becoming a member of, or acquiring shares in,
a co-operative society, company or other association of persons or
by way of any agreement or any arrangement of whatever nature),
not being a transaction by way of sale, exchange or lease of such
land, building or part of a building;
( 110) “Valuation Officer” means a person appointed by the Central
Government as a Valuation Officer who shall exercise powers as
specified in section 269(3), and includes a Regional Valuation Officer, a
District Valuation Officer and an Assistant Valuation Officer;
( 111) “virtual digital asset” means—
( a) any information or code or number or token (not being Indian cur-
rency or foreign currency), generated through cryptographic means
or otherwise, called by any name, providing a digital representation
of value exchanged with or without consideration, with the promise
or representation of having inherent value, or functions as a store
of value or a unit of account including its use in any financial
transaction or investment, but not limited to investment scheme;
and can be transferred, stored or traded electronically;
( b) a non-fungible token or any other token of similar nature, by what-
ever name called;
( c) any other digital asset, as the Central Government may, by notifi-
cation, specify;
( d) any crypto-asset being a digital representation of value that relies
on a cryptographically secured distributed ledger or a similar tech-
nology to validate and secure transactions, whether or not such
asset is included in sub-clause (a) or (b) or (c),
where,—
( i) “non-fungible token” means such digital asset as the Central Gov-
ernment may, by notification, specify;
( ii) the Central Government may, by notification, exclude any digital
asset from this definition, subject to such conditions as specified
therein;
( 112) “zero coupon bond” means a bond—
( a) issued by any infrastructure capital company or infrastructure
capital fund or infrastructure debt fund or public sector company
or scheduled bank on or after the 1st June, 2005;
( b) for which no payment and benefit is received or receivable before
maturity or redemption from infrastructure capital company or
infrastructure capital fund or infrastructure debt fund or public
sector company or scheduled bank; and
( c) which the Central Government may, by notification, specify,
where, the expression “infrastructure debt fund” means the infrastruc -
ture debt fund notified by the Central Government under Schedule VII
(Table: Sl. No. 46).
Definition of “tax year”.
3. (1) For the purposes of this Act, “tax year” means the twelve months period
of the financial year commencing on the 1st April.
(2) In the case of a business or profession newly set up, or a source of income
newly coming into existence in any financial year, the tax year shall be the period
beginning with—
( a) the date of setting up of such business or profession; or
( b) the date on which such source of income newly comes into existence,
and ending with the said financial year.