CHAPTER III - INCOME TAX PART 1

Amendment of section 72A

26. In section 72A of the Income-tax Act, in sub-section (2), in clause (i), for the words "value of assets", the words "book value of fixed assets" shall be substituted.

Amendment of section 80E

27. In section 80E of the Income-tax Act, in sub-section (1), in the proviso, for the words "twenty-five thousand rupees", the words "forty thousand rupees" shall be substituted with effect from the 1st day of April, 2001.

Amendment of section 80G

28. In section 80G of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (1), in clause (i), after the words, brackets, figures and letter "sub-clause (vii) of clause (a)", the words, brackets and letter "or in clause (c)" shall be inserted;
(b) in sub-section (2), after clause (b), the following clause shall be inserted, namely:
"(c) any sums paid by the assessee, being a company, in the previous year as donations to the Indian Olympic Association for

(i) the development of infrastructure for sports and games; or
(ii) the sponsorship of sports and games,
in India.";

(c) in sub-section (4), for the word, brackets and letter "clause (b)", the words, brackets and letters "clauses (b) and (c)" shall be substituted.

Amendment of section 80HHB

29. In section 80HHB of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (1), for the words "a deduction from such profits and gains of an amount equal to fifty per cent. thereof", the following shall be substituted, namely:

"a deduction from such profits and gains of an amount equal to

(i) forty per cent. thereof for an assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) ten per cent. thereof for an assessment year beginning on the 1st day of April, 2004,

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year";

(b) in sub-section (3),

(i) in clauses (ii) and (iii), for the words, brackets and figure "fifty per cent. of the profits and gains referred to in sub-section (1)", the words, brackets and figure "such percentage of the profits and gains as is referred to in sub-section (1) in relation to the relevant assessment year" shall be substituted;
(ii) in the proviso, for the words, brackets and figure "fifty per cent. of the profits and gains referred to in sub-section (1)", the words, brackets and figure "such percentage of the profits and gains as is referred to in sub-section (1) in relation to the relevant assessment year" shall be substituted.

Amendment of section 80HHBA

30. In section 80HHBA of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (1), for the words "a deduction from such profits and gains of an amount equal to fifty per cent. thereof", the following shall be substituted, namely:

"a deduction from such profits and gains of an amount equal to

(i) forty per cent. thereof for an assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) ten per cent. thereof for an assessment year beginning on the 1st day of April, 2004, and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year";

(b) in sub-section (2),

(i) in clause (ii), for the words, brackets and figure "fifty per cent. of the profits and gains referred to in sub-section (1)", the words, brackets and figure "such percentage of the profits and gains as is referred to in sub-section (1) in relation to the relevant assessment year" shall be substituted;

(ii) in the proviso, for the words, brackets and figure "fifty per cent. of the profits and gains referred to in sub-section (1)", the words, brackets and figure "such percentage of the profits and gains as is referred to in sub-section (1) in relation to the relevant assessment year" shall be substituted.

Amendment of section 80HHC

31. In section 80HHC of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (1), for the words "a deduction of the profits", the words, brackets, figure and letter "a deduction to the extent of profits, referred to in sub-section (1B)," shall be substituted;
(b) in sub-section (1A), for the words "a deduction of the profits", the words, brackets, figure and letter "a deduction to the extent of profits, referred to in sub-section (1B)," shall be substituted;
(c) after sub-section (1A), the following sub-section shall be inserted, namely:

"(1B) For the purposes of sub-sections (1) and (1A), the extent of deduction of the profits shall be an amount equal to

(i) eighty per cent. thereof for an assessment year beginning on the 1st day of April, 2001;
(ii) sixty per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) forty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) twenty per cent. thereof for an assessment year beginning on the 1st day of April, 2004,

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.".

Amendment of section 80HHD

32. In section 80HHD of the Income-tax Act, in sub-section (1), for the portion beginning with the words "in computing the total income of the assessee, a deduction of a sum equal to the aggregate of" and ending with the words, brackets and figure "manner laid down in sub-section (4)", the following shall be substituted with effect from the 1st day of April, 2001, namely:

"in computing the total income of the assessee

(a) for an assessment year beginning on the 1st day of April, 2001, a deduction of a sum equal to the aggregate of

(i) forty per cent. of the profits derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding forty per cent. of the profits referred to in sub-clause (i) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of the assessee in the manner laid down in sub-section (4);

(b) for an assessment year beginning on the 1st day of April, 2002, a deduction of a sum equal to the aggregate of

(i) thirty per cent. of the profits derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding thirty per cent. of the profits referred to in sub-clause (i) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of the assessee in the manner laid down in sub-section (4);

(c) for an assessment year beginning on the 1st day of April, 2003, a deduction of a sum equal to the aggregate of

(i) twenty per cent. of the profits derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding twenty per cent. of the profits referred to in sub-clause (i) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of the assessee in the manner laid down in sub-section (4);

(d) for an assessment year beginning on the 1st day of April, 2004, a deduction of a sum equal to the aggregate of

(i) ten per cent. of the profits derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding ten per cent. of the profits referred to in sub-clause

(i) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of the assessee in the manner laid down in sub-section (4),

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year".

Amendment of section 80HHE

33. In section 80HHE of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (1), for the words "a deduction of the profits", the words, brackets, figure and letter "a deduction to the extent of the profits, referred to in sub-section (1B)," shall be substituted;
(b) in sub-section (1A), after the words "in respect of which the certificate has been issued by the said company", the words, brackets, figure and letter "to such extent and for such years as specified in sub-section (1B)," shall be inserted;
(c) after sub-section (1A), the following sub-section shall be inserted, namely: "(1B) For the purposes of sub-sections (1) and (1A), the extent of deduction of profits shall be an amount equal to

(i) eighty per cent. of such profits for an assessment year beginning on the 1st day of April, 2001;
(ii) sixty per cent. of such profits for an assessment year beginning on the 1st day of April, 2002;
(iii) forty per cent. of such profits for an assessment year beginning on the 1st day of April, 2003;
(iv) twenty per cent. of such profits for an assessment year beginning on the 1st day of April, 2004,

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.".

Amendment of section 80HHF

34. In section 80HHF of the Income-tax Act,

(a) in sub-section (1),

(i) after the words "an Indian company", the words and brackets "or a person (other than a company) resident in India" shall be inserted;
(ii) for the words "a deduction of the profits", the words, brackets, figure and letter "a deduction to the extent of profits, referred to in sub-section (1A)," shall be substituted with effect from the 1st day of April, 2001;

(b) after sub-section (1), the following sub-section shall be inserted with effect from the 1st day of April, 2001, namely:

"(1A) For the purposes of sub-section (1), the extent of deduction of profits shall be an amount equal to

(i) eighty per cent. of such profits for an assessment year beginning on the 1st day of April, 2001;
(ii) sixty per cent. of such profits for an assessment year beginning on the 1st day of April, 2002;
(iii) forty per cent. of such profits for an assessment year beginning on the 1st day of April, 2003;
(iv) twenty per cent. of such profits for an assessment year beginning on the 1st day of April, 2004,

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.".

Amendment of section 80-IA

35. In section 80-IA of the Income-tax Act,

(a) in sub-section (3), for the words "any industrial undertaking", the words, brackets and figures "an industrial undertaking referred to in clause (iv) of sub-section (4)" shall be substituted;
(b) in sub-section (4), in clause (i), in the Explanation, for clause (c), the following clause shall be substituted with effect from the 1st day of April, 2001, namely:

"(c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;".

Amendment of section 80-IB

36. In section 80-IB of the Income-tax Act, with effect from the 1st day of April, 2001,

(a) in sub-section (3), in clause (ii), for the figures, letters and words "31st day of March, 2000", the figures, letters and words "31st day of March, 2002" shall be substituted;

(b) in sub-section (4), in the first proviso, for the figures, letters and words "31st day of March, 2000", the figures, letters and words "31st day of March, 2002" shall be substituted;

(c) in sub-section (5), in the second proviso to clauses (i) and (ii), for the figures, letters and words "31st day of March, 2000", the figures, letters and words "31st day of March, 2002" shall be substituted;

(d) in sub-section (10),

(i) in the opening portion, for the words "approved by a local authority", the words, letters and figures "approved before the 31st day of March, 2001 by a local authority" shall be substituted;
(ii) in clause (a), for the figures, letters and words "31st day of March, 2001", the figures, letters and words "31st day of March, 2003" shall be substituted.

Amendment of section 80L

37. In section 80L of the Income-tax Act, in sub-section (1),

(a) in clause (vii),

(i) after the words "industrial development in India:", the words, brackets and figures "and which is eligible for deduction under clause (viii) of sub-section (1) of section 36;" shall be inserted;
(ii) the proviso shall be omitted;

(b) in clause (x), for the words "for residential purposes:", the words, brackets and figures "for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36," shall be substituted.

Amendment of section 80-O

38. In section 80-O of the Income-tax Act, for the portion beginning with the words "a deduction of an amount" and ending with the words "total income of the assessee", the following shall be substituted with effect from the 1st day of April, 2001, namely:

"a deduction of an amount equal to

(i) forty per cent. for an assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent. for an assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent. for an assessment year beginning on the 1st day of April, 2003;
(iv) ten per cent. for an assessment year beginning on the 1st day of April, 2004,

of the income so received in, or brought into, India, in computing the total income of the assessee and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year".

Amendment of section 80R

39. In section 80R of the Income-tax Act, for the portion beginning with the words "a deduction from such remuneration of an amount" and ending with the words "competent authority may allow in this behalf", the following shall be substituted with effect from the 1st day of April, 2001, namely:

"a deduction from such remuneration of an amount equal to

(i) sixty per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2004,

as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year".

Amendment of section 80RR

40. In section 80RR of the Income-tax Act, for the portion beginning with the words "a deduction from such income of an amount" and ending with the words "competent authority may allow in this behalf", the following shall be substituted with effect from the 1st day of April, 2001, namely:

"a deduction from such income of an amount equal to

(i) sixty per cent. of such income for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent. of such income for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent. of such income for an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent. of such income for an assessment year beginning on the 1st day of April, 2004,

as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year".

Amendment of section 80RRA

41. In section 80RRA of the Income-tax Act, for the portion beginning with the words "a deduction from such remuneration" and ending with the words "authority may allow in this behalf", the following shall be substituted with effect from the 1st day of April, 2001, namely:

"a deduction from such remuneration of an amount equal to
(i) sixty per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent. of such remuneration for an assessment year beginning on the 1st day of April, 2004,

as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year".

Amendment of section 87

42. In section 87 of the Income-tax Act, with effect from the 1st day of April, 2001, (a) in sub-section (1), for the word, figures and letter "and 88B", the figures, letters and word ", 88B and 88C" shall be substituted; (b) in sub-section (2), after the words, figures and letter "or section 88B", the words, figures and letter "or section 88C" shall be inserted.

Amendment of section 88

43. In section 88 of the Income-tax Act,

(a) in sub-section (2), in clause (xv), in sub-clause (c), in item (5), for the words, brackets and figures "which is approved for the purposes of clause (viii) of sub-section (1) of section 36", the words, brackets and figures "which is eligible for deduction under clause (viii) of sub-section (1) of section 36" shall be substituted;
(b) in sub-section (5), for the words "ten thousand rupees", at both the places where they occur, the words "twenty thousand rupees" shall be substituted with effect from the 1st day of April, 2001.

Amendment of section 88B

44. In section 88B of the Income-tax Act, for the words "ten thousand rupees", the words "fifteen thousand rupees" shall be substituted with effect from the 1st day of April, 2001.

Insertion of new section 88C

45. After section 88B of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2001, namely:

Rebate of income-tax in case of women below sixty-five years

"88C. An assessee,

(a) being a woman resident in India; and
(b) below the age of sixty-five years, at any time during the previous year,

shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on her total income, with which she is chargeable for any assessment year, of an amount equal to hundred per cent. of such income-tax or an amount of five thousand rupees, whichever is less.".

Amendment of section 112

46. In section 112 of the Income-tax Act, in sub-section (1),

(a) in the proviso, for the words "being listed securities", the words "being listed securities or unit" shall be substituted;
(b) for the Explanation, the following Explanation shall be substituted, namely:

Explanation.For the purposes of this sub-section,

(a) "listed securities" means the securities

(i) as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); and

(ii) listed in any recognised stock exchange in India;

(b) "unit" shall have the meaning assigned to it in clause (b) of Explanation to section 115AB.,