New IT Act 2025 — Knowledge Bank

Interpretation

Section 189 — Interpretation

Old Act equivalent: Section 95-102 of IT Act 1961 Sub-part: Anti-Avoidance

Statutory Text

  1. For the purposes of this Chapter, unless the context otherwise requires,— ( a) “banking company” means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; ( b) “primary agricultural credit society”, and “primary co-operative agricul - tural and rural development bank” shall have the meanings respectively assigned to them in section 150; ( c) “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place; ( d) “specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place. CHAPTER XIII DETERMINATION OF TAX IN SPECIAL CASES A.—Determination of tax in certain special cases Determination of tax where total income includes income on which no tax is payable.
  2. Where there is included in the total income of an assessee any income on
    which no income-tax is payable under the provisions of this Act, the assessee shall be entitled to a deduction, from income-tax with which he is chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable. Tax on accumulated balance of recognised provident fund.
  3. Where the accumulated balance due to an employee participating in a
    recognised provident fund is included in his total income, owing to the
    provisions of paragraph 8 of Part A of Schedule XI not being applicable, the Assess - ing Officer shall calculate the total of the various sums of tax as per the provisions of paragraph 9 thereof. Tax in case of block assessment of search cases.
  4. (1) Irrespective of anything contained in any other provisions of this Act, the
    total undisclosed income of the block period, determined under section 294 shall be chargeable to tax at the rate of 60%. (2) The tax chargeable under sub-section (1) shall be increased by a surcharge, if any, levied by any Central Act. Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer.
  5. (1) Where the total income of an assessee, being an individual, who is a
    resident and an employee of an Indian company engaged in specified knowl - edge based industry or service or an employee of its subsidiary engaged in specified knowledge based industry or service (hereafter in this section referred to as the resident employee), includes income specified in column B of the Table below, the income-tax payable shall be the aggregate of income-tax computed at the rate speci-
    fied in the column C applied on the corresponding income specified in column B. TABLE Sl. No.Income Rate of Income- tax payable A B C
  6. Income from dividend on Global Depository Receipts of an Indian company engaged in specified knowledge based industry or service, issued as per such Employees’ Stock Option Scheme as the Central Government may, by notification41, specify in this behalf and purchased by him in foreign currency.10%
  7. Income from long-term capital gains arising from the transfer of Global Depository Receipts referred to in serial number 1.12.5%
  8. Total income as reduced by income referred to in serial numbers 1 and 2.Rates in force. (2) Where the gross total income of the resident employee— ( a) consists only of income by way of dividends in respect of Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 1), no deduction shall be allowed to him under any other provision of this Act; ( b) includes any income referred to in sub-section (1) (Table: Sl. No. 1
    or 2),— ( i) the gross total income shall be reduced by such income; and ( ii) the deduction under any provision of this Act shall be allowed as if the gross total income as so reduced were the gross total income of the assessee. (3) The section 72(6) shall not apply for computation of long-term capital gains arising out of the transfer of long-term capital asset, being Global Depository
    Receipts referred to in sub-section (1) (Table: Sl. No. 2). (4) For the purposes of this section,— ( a) “Global Depository Receipts” means any instrument in the form of a depository receipt or certificate (by whatever name called) created by the Overseas Depository Bank outside India or in an International Financial Services Centre and issued to investors against the issue of,— ( i) ordinary shares of issuing company, being a company listed on a recognised stock exchange in India; or ( ii) foreign currency convertible bonds of issuing company; or ( iii) ordinary shares of issuing company, being a company incorporated outside India, if such depository receipt or certificate is listed and traded on any International Financial Services Centre; ( b) “information technology service” means any service which results from the use of any information technology software over a system of infor - mation technology products for realising value addition; ( c) “information technology software” means any representation of instruc - tions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing inter-activity to a user, by means of an automatic data pro - cessing machine falling under heading information technology products but does not include non-information technology products; ( d) “Overseas Depository Bank” means a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company; ( e) “specified knowledge based industry or service” means— ( i) information technology software; or ( ii) information technology service; or ( iii) entertainment service; or ( iv) pharmaceutical industry; or ( v) bio-technology industry; or ( vi) any other industry or service, as specified by the Central Govern - ment, by notification; ( f) “subsidiary” shall have the same meaning as assigned to it in section 2(87) of the Companies Act, 2013 (18 of 2013) and includes subsidiary incorporated outside India. Tax on certain incomes.
    [Ss. 115B, 115BB, 115BBF, 115BBG, 115BBH and 115BBJ of the 1961 Act ]
  9. (1) Irrespective of anything contained in any other provision of this Act, where
    the total income of an assessee as mentioned in column B of the Table below, includes income of the nature specified in column C of the said Table, the income-tax payable by such assessee, for a tax year, shall be the aggregate of— ( a) income-tax calculated on income mentioned in column C, at the rate mentioned in column D, subject to the conditions specified in column E; and ( b) income-tax with which the assessee would have been chargeable had his total income been reduced by income mentioned in column C thereof. TABLE Sl. No. Assessee Income Rate of taxConditions A B C D E
  10. Any person. Winnings (other than from any online game) from— (a) lottery; or (b) crossword puzzle; or (c) race including horse race (not being income from the activity of own - ing and maintain - ing race horses); or (d) card game and other game of any sort; or (e) gambling or bet - ting of any form or nature.30% Nil.
  11. A person, res - ident in India
    and who is a patentee (herein refe-
    rred to as an eligible asses - see).Royalty in respect of a patent developed and registered in India.10% (a) No deduction in respect of any expenditure or allowance shall be allowed to the eligible assessee under any provi - sion of this Act in computing his income referred to in column C; (b) an option for tax - ation of income by way of roy - alty in respect Sl. No. Assessee Income Rate of taxConditions A B C D E of a patent de - veloped and registered in
    India is exer - cised in the pre - scribed manner, on or before the due date speci - fied under sec - tion 263(1) for furnishing the return of income for the relevant tax year; (c) where an op - tion is exercised under clause (b) and the el - igible assessee does not offer its income for taxation as per the provisions of columns C and D for any of the five tax years, suc - ceeding such tax year, then such assessee shall not be eligible to claim the benefit of the provisions of columns C and D for five tax years subse - quent to the tax year in which such income has not been offered to tax as per such provisions.
  12. Any person. Income by way of trans - fer of carbon credits.10% No deduction in re - spect of any expen - diture or allowance shall be allowed to Sl. No. Assessee Income Rate of taxConditions A B C D E the assessee under any provision of this Act in computing his income referred to column C.
  13. Any person. Any income from the transfer of any virtual digital asset.30% (a) No deduction in respect of any ex - penditure (other than cost of ac - quisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provi - sion of this Act in computing the income referred to in column C; and (b) no set off of loss from transfer of the virtual dig - ital asset com - puted herein shall be allowed against income computed under any provision of this Act to the as - sessee and such loss shall not be allowed to be carried forward to succeeding tax years.
  14. Any person. Any income by way of net winnings from any online game, computed in the manner, as may be prescribed.30% Nil.
  15. Any person. Any profits and gains from life insurance
    business.12.5% Nil. (2) For the purposes of this section,— ( a) “carbon credit”, in respect of one unit, means reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price; ( b) “computer resource” shall have the same meaning as assigned to it in section 2(1)( k) of the Information Technology Act, 2000 (21 of 2000); ( c) “developed” means at least 75% of the expenditure incurred in India by the eligible assessee for any invention in respect of which patent is granted under the Patents Act, 1970 (39 of 1970) (herein referred to as the Patents Act); ( d) “horse race” shall have the meaning assigned to it in section 94(6); ( e) “internet” means the combination of computer facilities and electro - magnetic transmission media including related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission; ( f) “invention” shall have the same meaning as assigned to it in section
    2(1)( j) of the Patents Act; ( g) “lump sum” includes an advance payment on account of such royalties which is not returnable; ( h) “online game” means a game that is offered on the internet and is accessible by a user through a computer resource including any telecommunication device; ( i) “patent” shall have the same meaning as assigned to it in section 2(1)( m) of the Patents Act; ( j) “patented article” and “patented process” shall have the same meanings as respectively assigned to them in section 2(1)( o) of the Patents Act; ( k) “patentee” means the person, being the true and first inventor of the
    invention, whose name is entered in the patent register as the patentee, as per the Patents Act, and includes every such person, being the true and first inventor of the invention, where more than one person is registered as patentee under that Act in respect of that patent; ( l) “royalty”, in respect of a patent, means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains” or consideration for sale of product manufactured with the use of patented process or the patented article for commercial use) for the— ( i) transfer of all or any rights (including the granting of a licence) in respect of a patent; or ( ii) imparting of any information concerning the working of, or the use of, a patent; or ( iii) use of any patent; or ( iv) rendering of any services in connection with the activities referred to in sub-clauses ( i) to ( iii); ( m) “true and first inventor” shall have the same meaning as assigned to it in section 2(1)( y) of the Patents Act; and ( n) for the purposes of sub-section (1) (Table: Sl. No. 4), the term “transfer” as defined in section 2( 109), shall apply to any virtual digital asset, whether capital asset or not. Tax on income referred to in sections 102 to 106.
  16. (1) Where the total income of an assessee— ( a) includes any income referred to in section 102 or 103 or 104 or 105 or 106 and reflected in the return of income furnished under section 263; or ( b) determined by the Assessing Officer includes any income referred to in any of the said section 102 or 103 or 104 or 105 or 10653, if such income is not covered under clause ( a), the income-tax payable shall be the aggregate of— ( i) income-tax calculated on the income referred to in clauses ( a) and ( b), at the rate of 24[30%]; and ( ii) income-tax with which the assessee would have been chargeable had his total income been reduced by income referred to in clause ( i). (2) Irrespective of anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in sub-section (1)(a) and ( b). B.—Special provisions relating to tax on capital gains Tax on short-term capital gains in certain cases.
  17. (1) Where the total income of an assessee includes any income chargeable
    under the head “Capital gains”, arising from the transfer of a short-term capital asset— ( a) being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust; and ( b) the transaction of sale of such equity share or unit is chargeable to secu - rities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), then, the tax payable by the assessee on the total income, subject to the provisions of sub-section (2), shall be the aggregate of— (2) In the case of an individual or a Hindu undivided family, being a resident, where the total income, as reduced by short-term capital gains computed under sub-section (1), is below the maximum amount which is not chargeable to income-tax, then,— ( a) such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and ( b) the tax on the balance of such short-term capital gains shall be computed at the rate as applicable in sub-section (1)( i). (3) The provisions of sub-section (1)( b) shall not apply to a transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in for - eign currency. (4) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VIII shall be allowed from the gross total income as reduced by such capital gains. (5) For the purposes of this section, the expression “equity oriented fund” shall have the meaning assigned to it in section 198. Tax on long-term capital gains.
  18. (1) Where the total income of an assessee includes any income arising
    from the transfer of a long-term capital asset which is chargeable under the head “Capital gains”, the tax payable by the assessee on the total income, subject to sub-sections (2), (3) and (4), shall be the aggregate of— ( a) income-tax payable on the total income as reduced by such long-term capital gains, had the total income, as so reduced, been his total income; and ( b) income-tax calculated on such long-term capital gains at the rate of 12.5%. (2) In the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by long-term capital gains computed under sub-section (1) is below the maximum amount which is not chargeable to income-tax, then,— ( a) such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and ( b) the tax on the balance of such long-term capital gains shall be computed at the rate as referred in sub-section (1). (3) In the case of an individual or a Hindu undivided family, being a resident, in the case of transfer of a long-term capital asset, being land or building, or both, which

Provisos

None.

Explanations

None.

Tables

See statutory text above.

Cross-References

To be updated.

Notes

  • Verification status: pending
  • Auto-generated from IT Act 2025 PDF on 2026-04-13

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