 the finance bill, 1966 arrangement of clauses clauses chapter i preliminaryi, short title and commencement  oi\pter ii income-tax and annuity deposits for the pinancial year 1966-672 income-tax 3 annuity deposit  chapter iii amendme"'-'ts to the income-tax acr ,4 amendment of section 2 5 amendment of section 13 6 amendment of section 32 7 amendment of section 33 8 amendment of section 33a 9 amendment of section 34 10 ·insertion of new section 3sa 11 amendment of ,section 36 12 amendment of section 43 13 amendment of section 45 14 amendment of section 55 15 amendment of chapter via, 16 amendment of section 85a 17 insertion of new sections 85b and 8se 18 amendment of section 86a 19 amendment of section 88 20 amendment of section 104  clauses21 amendment of section 109 22 ~mendment of section 112a 23 amendment of section 1) 4 24 amendment of section ) 15 25 amendment of section 193 26 amendment of section 20j 27 amendment of section 235 28 amendment of section 236a 29 amendment of section 280a 30 amendment of section 280e 31 substitution of new section for section 280q 32 amendment of section 280x 33 amendment of section 280zb 34 insertion of new sections 288a and 288b 35 amendment of section 297 36 amendment of first schedule 37 amendment of fifth schedule  chapter iv other direct tans38 amendment of act 34 of 1953 39 transitional provisions 40 repeal of act 29 of 1957 41 amendment of act 18 of 1958 42 repeal of act 14 of 1963 43 amendment of act 7 of 1964 - chapter v  indirect taxfst4 sptcial duties of customs 45 regulatory duties of customs 46 amendment or act i of 1949 47 amendment of act i of 1944 48 special duties of excise on certain goods  clauses49 regulatory duties of excise 50 discontinuance of salt duty  chapter vimiscbllaneoi s 51 amendment of act 74 of 1956 52 amendment of act 63 of j 960 53 amendlllent of act 52 of 1963   the first schedule the second schedule  the finance bill, 1966 a bill~' ~i, ,to give ~ffect to the financial proposals of the central government for the financial year 1966-67 ~~ ''''', be it enacted by paruament in the seventeenth year of the \' republic of india ali follows:-i'i:',' craner-i  ~,\"" preliminaryr~ '~ s 1 (1) this act may be called the finance act, 1966 short title and comf (2) save as otherwise provided in this act" sections 2 to 43, section mence-c~ 52 and section 53 shall be deemed to have come into force on the mente ~~:~~ 1st day of april, 1966 ~ i' - ~: , chapter ii  ~:  lo income-tax and annuity deposits for me 'financial year ·19~7 ,'~ 2 (1) subject to the provisions of sub-secti6ns: (2),(3), '(4) lind' (5), income--'for the assessment year commencing on the 1st day of april, 1966, tax income-tax shall be charged at the fates specified inpart i of the  first schedule and, in the cases to which paragraphs a, b, c and d ,;' is oj that part apwy, shall be increased by a surch,arge for purpois of the union and a special surcharge for purposes of the union, calculated in either case in the manner provided therein (2) in making any a~sessment for the assessment year ~ommenc­ing on the 1st day of april, 1966, where the total income of an assessee, not being a company includes any income chargeable under 5 the head "salaries", the income-tax payable by the· assessee on that part of his total income which consists of such inclusion shall be an amount bearing io the total amount of income-tax payable according to the rates applicable under the operation of the finance act, 1965, 10 of on his total income the same proportion as the amount of such 10 inclusion bears to his total income (3) in makin2 any assessment for the assessment year commencing on the l~ day of april, 1966, where the total income of a company, other tllu ule life insurance corporation of india established under the life jwurance corporation act, 1956, includes any profits and is 31 of gains from life insurance business, the income-tax payable by it shall be ute aggregate of the income-tax calculated-(i) on the amount of profits and gains from life insurance business so included, at the rate applicable in the case of the life insurance corporation of india, in accordance with para- 20 graph' e of part i of the first schedule, to that part of its total  -bicomewill~ consists of profits and gains from life insurance business; and -(ii) on the remaining part of its total income, at the rate applicable to the company on its total income  2s '(4)" !ii -eases· to which chapter xii of the income-tax act, 1961 43 of (hereinafter referred to as the income-tax act) applies, the tax chargeable shall be determined as provided in that chapter, and with reference to the rates imposed by sub-section (1) or the rates as specified in that chapter, as the case may be 30 (5) (a) in respect of any assessment for the assessment year commencing on the 1st day of april, 1ge6, in the case of an assessee being a domestic company or an assessee other than a company,-(i) where his total income includes any profits and gains derived from the export of any goods or merchandise outof india, 35  be shall be entitled to a deduction, from the amount of incometax with which he is chargeable, of an amount equal to the income-tax calculated at one-tenth of the average rate of incometax on the amount of such profits and gains included in his total income; 40 (ii) wh~e he is engaged in the manufacture of any articlee 111-: an industr:f:~~ed, ~ the fii:st ~$le, tq, ~; industd_  q~~~~~w~!:': ·;it  io',fl-:4  , ~j':fv~·~~~'"· ';-"',-  r , " ' •• - -  " - •• -                                  ·                                ,11\' •• ·~-·                                                                     ,                                                                               ~  ~",~,_                                                                                                                                                                                       j  (development and regulation) act, 1951,' an'd has,' dlittng the'  previous year, exported such articles out of india,~he·au-be  entitled, in addition to the deduction of income-~ to  in sub-clause (i), to a further deduction,' from the                                                      "t- of  income-tax with which he is chargeable for the assessnent year,  of an ~unt equal to the income-tax calculated at the average , rate of income-tax on an amount equal to' two per~tof" the  sale proceeds receivable by him in respect of such export      explanation-in this sub-clause, the expression "sale ~  ceeds" does not include freight or insurance attributable· to the  transport of the articles beyo'nd the custo'ms s~ti~ • ~ed in  the customs act, 1962;            (iii) where he is engaged in th~ manufacture of ~y articles                                                                                                                                                                       \      in lin industry specified in the said fi:rst,schedule iuid·has ,during     ·the previous year, sold suc;h ar~icles to any ~th~ pe~n:ld'1ndia'      who himself has exported them out of india,' and evfdence':fs' p~      duced qefore the income-tax officer of' such articles "hll'\tirig deen      so exported, the assessee shan be entitled to a deduction; 'from ,,' th~ amount of income-tax with which he is chaigeab~ for' the      assessment year, of an amount equa(to the incoin~tai·ca1dflated      at the average rate of income-tax on' a sum ectual to'two'per cent     'of the sale proceeds receivable by hbn in regpeet of sqeh~articlel j" ,  from the exporter    ;; (b) the aggregate amount of the deductions under' this sub-section  shall in no case exceed the amount' of incorrie~tax  otherwise 'payable 'by the assessee                                                                                                                                                                                                                                                                          - 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                                                                                                                                                                                                                                                                                                                                                                                 k                                                                                                                                                                                                                                                                                                                                                                                           '\                      (c) nothing contained in sub-clause (ii) 'or sub-c1ause (iii) of clause (a) shall apply in relation t~   '                                                                                                                                                                                                                                                                                                                                                -                                                                                                                                                                                                                                                                                                                                                          ~                                                                                                                                                                                                                                                                                                                                                                                 , "                                                        (1) fuels,                                                                                                                                                                                                                                                                              '                                                                                                                                                                                                                                                                                                                                                                                   '-,'  -,         ,"              "\                                                                                                                                                 ~ ':' (2) fertiiisers, (3) photographic raw 1um and paper"        (4) textiles (including those dyed, printed or o'therwise pro-cessed) made wholly or in part of jute; including j~te twine and rope,      (5) newsprint,       (e) pulp-wood pulp, mechanical,                                                           ,chemical,                                                                             including dissolving pulp,      (7) sugar,     (8) vegetable oils and vanaspathi,       (9) cement and gypsum 'products,     (10) arms and ammunition, and ;,;,~"" (11) cigarettes, ~;;l14i,;" respectively, specified in items 2, 18, 20,23(2),24 (2): 24 (5), 25, 28, ~? " 35, "87 and 3~ of the first schedule to the industries (development ~fi4s and 'regulation) act, 1' , (d) the amount of any profits and gains derived from the export of any goods or merchandise out of india in respect of which deduction of income-tax is admissible under sub-clause (i) of clause (a) shall be"computed in accordance with the rules made by the'board in this behah ' 5 , (6) in cases in which tax has to be deducted under sectio~s 193 to 195 of the income-tax act at the rates in force, the deduction shall b~made; at the rates specified in part ii of the first sc~edule ,  (7) for the purposes of this section and the first schedule,-" (a) ,"company in which the public are 'substantially inter- jo ested" includes a subsidiary company of such· company referred , to, in clause (b) of section 108 of the income-tax act; (b) "domestie company" means an indian company, or any other company which, in respect of its income liable to incometax under the income-tax act for the assessment year com- is mencing on the 1st day of april, 1966, has made the prescribed arrangements for the declaration and payment within'india of the dividends payable out of such income in accordance with the provisions of section 194 of that act; (c) "earned income" means any income of an assessee who 20 'u 'ad' individual, or a hindu undivided family,or' anuitregistered firm [not being an unregistered firm assessed under clause (b) 'of section 183 of the income-tax act] or ail association of persons or body of individuals, whether inllorporated or not, not bejng-25 {a) a company, or (b) a local authority, or (e) a registered firm, or (d) an unregistered firm 8sse!sed under clause (b) of the said section 183--   30 (i) which is chargeable under the head "salaries": or i ! (ii) which is chargeable under the head' "profits and gains of business or profession" where the ~usiness or p~~fession is carrmd on by the assessee or, in the case of 35 a ftrm, where the assessee is a partner actively engaged in the conduct of the business or profession; or (iii) which is chargeable under the head "income from other sources" if it is immediately derived from personal exertion or represents a pension or superannu- 40 ation or o~er allowance given to the assessee in respect ,- of the' p~)services  of any deceased person~ or' which ;"'~'ij~:; ,i; -<-]s ~argea!tt~ljilder that head ~~er  ~a~ (~)of su, b4 ',' '2' f so·h eft ;q a' "" tn"'!\ft'lo_+ap a ,·e9\~ ',, ,' ;:,~ , 'j~~~'" '<rio, ;;~t~"~ ;,~:1' " ~'i~~;':' - "'i!,~  '~'i",~bo ", ' r~~t( \'~ , , ',"lcl1~e!8 any such income which, though it is the income of an-, other person, is included in the assessee's total income under the  provisions 9f the income-tax act; but does not include any such income on which income-tax is not payable under clause (iii) or clause (v) of section 86 of that act or which is exempted from tax under a notification issued under section 60 or section '60a of the indian income-tax act, 1922, as continued in force by -clause (1) of sub-section (2) of  sectlon 297 of the income-tax act; (d)  "industrial company" me~ a company which is mainly engaged in the business of, generation or distribution of electricity or any other form of power or in the, construction of ships or in the  manufacture or processing of goods qr i~ mining explanation-for the purposes' of this, clause, a company shall be deemed lobe mainly engaged in the business of generation or distribution of e1ec~ty ar any other form~ofpower or in the construction of, ships, orin the manufacture or processing of goods or in mining, if ,the income attributable to any of the aforesaid activitjes included in its total income for, the previous year is ~ not less than fifty-one 'per c~nt 9f $u(!h to~' b},come;   '"":' ~' , (e) "uneamedincome"  means income which is not "earned income"; "  -", >\  41'': ~i ~r}·:/·, ; ~!  ":j1 (f) "tax -free security" 'means imy' security of the central goyernwent issued or declared ~to 'be income-tax free, or any security of a state government issued' incpme-tax free, the income-tax whereon is payable by the state government; , (g) all other words and expressions used in this section and  the first schedule but not defined in this, sub-section and defined in the income-tax act, shall have the meanings' respectively assigned to them in that act ···~30 ,; ~, • ' 3 save as oth~ provided· in chapterxxila 'of the "incom'e- annuity ~,t :', ,- tax act, annuity deposit for the, assessment year commen"cing op the deposit 1st day of april, 1966, shall be made by every person to' whom the provisions of that chapter apply, at the rates specified in the second 35 schedule :'  chapter 'ill amendments' to the income-tax act -4 in section 2 of the income-tax act,-amead-(a) in clause (18),-, =~~dof 2, (i) insub-clause (b), for the words "is not a private company", the words "is 'a public company" shall be subs- tituted; , ' (ii) in explanation 2, for the words "consists wholly", the words ,"consist~mainly in the construction of ships or" shall, be substituted; (b) in clause (22), in suboclause (ia), after the words, figures and letters "the 31st day of march, 1964", the words, ftgmies and letters "and before the 1st day of april, 198~" shall be inserted; (e) in clause (42a), after the words "the date of its trans-s fer", the following shall be inserted, namely:-"but does not include a capital asset, being a certificate issued by an authorised dealer as defined in clause (ai) of seetiod 2 of the foreign exchange regulation act, 1947, as evidence of the remittance of foreign currency or other 10 foreign ·exchange [as defined respectively in clause (e) ~d clause (d) of the said section] to india from a country outside india in accordance with the provisions of the said act and any rules made thereunder, during the period com- mendng on the 26th day of october, 1965 and ending on the 15 28th day of february, 1968 or such later date as the cen-  tral governmentmay by notification in the official gazette, ,   specify in this behalf, notwithstanding that such capital asset has been held by the assessee for not more than twelve months immediately preceding the date of its transfer" 20 amend- ·5· in section 13 of the income-tax act, in clause (b), for sub-~u~ 13 clause (u), the following sul>-clause shall be substituted, d8ljle1y:-" (ii)  if under the t~ of the trust or the rules governing the 'instifution, any part of such income enures, directly or indirectly, or if any part of such income or any property of ilie 2s trust -or the institution is  during ,the previous year used or applied, directly or indirectly for the benefit of the author of the trust or the founder of the institution or any person who has made a substantial contribution to such trust or institution 'or any relative of such author, founder or person and where such 30 author, founder or person is a hindu undivided family, any part of such income enures, or any part of such income or any such property is durinj( the previous year used or applied,  directly or indirectly, for the bendt of any member of the hin~u undivided family or any relative of any member of the 3s family" 6 in section 32 of the income-tax act, in sub-section (1) ,-amendment of section 32 (a) to clause (ii),the following proviso shall be add~ ~e1y:-~::"provided that where the achjal cost ot any machinery 40  :·,~::;~:~()r~oli!r)i'dbes not ~ceed seven- hundred and fifty ru~es the  - ··"',;:~·"actual cost'jh~ ihailhe adowed'u 'a deduewmblrespeet ::}:},:r~il;  " ,":~;'" '>' ,:  acqwred, t ":: ~ :st·~/ilft1":!~ %~"\'i;  (b) in clause (iii), for clause (1) of the e:q>ltmgtioii, the ·'~~a~"~,~following clause shall be substituted, namely:-"i~~'1ri~'- f,' '(1) "moneys payable" in reaped of any building, 1~~!"  macbinery, plant or furniture includes--'  ;~i?~·'  (a) any insurance, salvage or compensation moneys ~~£?"f;~) ;-, payable in -respect thereof; '"7\~ (b) where the building, machiaery, plant or furniture is sold, the price for which it is sold, so,'however, that where the actual co~t of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to ,be twenty-five thousand rupees, the moneys payable in resp£ct of such motor car shall1:ietaken to be a sum which  bears to the amount for which the·motor car is sold or, as the :case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the ': amount of scrap value, if any) the sad¥! proportion as the  amount of twenty-five thousand 'rupees bears to the actual cost of the motor car to the assessee as·it would have been -computed before applying the said 'proviso;'; (c) in clause (iv), for the words "ckflwing a remuneration ' not exceeding two hundred rupees per mensem,", the words 'the  i,· : income of each such persod chargeable under the head "salaries" la; ' is seven thousand five hundred ru~ees or less,' shall be $ubstituted :~~fk? 7 in section 33 of the income-tax act, in'the eq,la»atioft to sub- amedd- '' ion (3), the words "and the subsidiary company is an indian ~~f33 r m " shall be omitted ~w  \~y, i:;':c~  :;, :~' li: in section 33a of the income-tax act,-amendment of (a) in sub-section (1),-section 33a (0 in clause (i) for the words "forty per cent", the words "fifty per cent" shall be substituted; (ii) jn clause (n), for the words "twenty per cent", the ~ords "thirty per cent" shall be substituted; 15 \ (iii) for the words "be allowed as a deduction in respect of the third succeeding previous year next following the previous year in which the land 4s -preparecl·for ·plantlng·· or replanting, as the case may be:", the followiiig shall be substituted, namely:-"be allowed as a deduction in the manner specified ; hereunder, namely:-(a) the amount of thje ,deve1opmen~ allowance s - shall, in the first instance, be computed with reference to that portion of the actual cost of planting which is incurred during the previous year in which the land is prepared for planting or replanting, as j the case may be, and in the previo1:1s year next fol- iq lowing, and the amount so computed shall be allow- 1 ed as a deduction in respect of such previous year i next following; and -(b) thereafter, the development allowance shall again be computed with reference to the actual cost i of planting, and if the sum so· computed exceeds the amount allowed as a deduction, under clause (a), the  amount of the excess shall be al10wed as adeduction in respect of, the third succeeding previous year dlext following the previous year in which the land has 2 beel?- prepared for plantin~ or replanting, as the case may be:"; (b) in sub-s(ection (2) ,-,  - (i) for tlie words "the third succeeding previous year next following the previous year in which the land has been 2$ prepared", the words, brackets and figure "the previous year in respect of which the deduction is required to be allowed under sub-section (1)" shall be substituted; (ii) for'the words, brackets and figure "calculated at the rates specified in sub-section (1) ", the words, brackets and 30~ figure "calculated at tl¥ rates and in the manner specified ~ in sub-section (1)" shall be substituted amendment of "ctioo st i in section 34 of the income-tax act, in clause (a) of sub-section (3), after the proviso, the following proviso shall be inserted, namely:-: :i\",:-·,ft~ 3s 'provided further that where a ship has been acquired after the 28th ~ay of february, 1966, this clause shall have effect in res-,pect of sucbsbj'p as' if for the words "seventy-five", the word ~ ccfif~" ,had be«w,: $~p'sti~'l~ed'~, -" ";~~"""""" • o:~ta~;'! ,,',   '-"t:~'i'j{,~t·:\>~~:;~~ l  -   ,   10 after section 35 of the income-tax act, the followinl section inserttri~  -be inserted, namely:-of new section 35a  '35a (1) in respect of any expenditure of a capital nature e?,pen-966 th  'ti diture on tncwted af~r the 28th day of februarr, 1 , on e acqwsl on acquisition of paterit rights or copyrights (hereafter, in this section, referred o~ patent to as rights) used for the purposes of the business, there shall, ~~~~ts, subject to and in accordance with the provisions of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount of such expendi-" ture  :"a::~'blui  &o ~ ~ ~ f explanation-for the purposes of this section,-(i) "relevant previous years" means the fourteen previous years beginning with the previous year in which such expenditure is incurred or, whe~ such expenditure is incurred before the commencementot the business, the fourteen previous years beginning with the previous y~ar in which the business commenced: provided that where the rights cqmmenced, that' is to say, became effective, in any year prior to the previous year in which expenditure on the acquisition thereof wa~ incurred by the assessee, this clause shall have effect with the substitution for ~ reference to fourteen years of a reference to fourteen ~ars less the n~ber of complete years  which, when the rights are acquired by the assessee, have elapsed since the commencement thereof, and if  fourteen years have elapsed as aforesaid, of a reference to one year; (ii) "appropriate fraction" means the fraction the numerator of which is one and the denominator of which is the number of the relevant previous years ~ ~·,~\4~, ' (2) where the rights come to an end without being subsequently revived or where the whole or any part of the rights is·'; sold and the proceeds of the sale (so far as they consist of capital sums) are no't ~ss than the cost of acquisition thereof remaining unallowed, no deduction under sub-section (1) shall be allowed in respect of the previous year in which the rights come to an end or, as the case may be, the whole or any part of the rights is sold or in respect of any subsequent previous year ;t~~~e' ' , (3) where the rights either come to an end without being subsequently revived or are sold in their entirety and the proceeds of the sale (so far as they consist of capital sums) are less than the cost of acquisition thereof remaining unallowed, a deduction equal to such cost remaining unallowed or, as the case may be, such cost remaining unallowed as reduced by the proceeds of the sale, shall be allowed in respect of the previous year in which the tights come to an end, or, as the case may be, are sold (4) where the whole or any part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) exceed the amount of the cost of acquisition thereof remaining unallowed, so much of the excess as does not exceed the difference between the cost of acquisition of the rights and the amount of such cost remaining unallowed shall be chargeable to income-tax as income of'the busit1jess of the previous year in which the whole or any part of the rights is sold expzanation-where the whole or any part of the rights is i sold in a previous year in which the business is no 10nge¥' in· existence, the provisions of this sub-~ction shall apply as if the j business is in existence in that previous year : (5) where a poct of the rights is sold and sub-section (4)' does not apply, the amount of the deduction to be allowed under sub-section (1) shall be arrived at by-(a) subtracting the proceeds of the sale (so far as they consist of capital sums) from the amount of the cost of acquisition of the rights remaining unallowed; and (b) dividing the remainder by the number of relevant previous years which have not expired at the beginning of the previous year during which the rights are sold! amend-11 in section 36 of the income-tax act, in sub-section (1), in ~~~~i~~f 36 clause (t,iii), for the words "an amount not exceeding ten per cent of the total income carrie to such reserve account:", the following shall be substitut~d, namely:- "an amount not exoeeding-(a) in the case of a financial corporation whose paid-up share capital does not exceed three crores of rupees, twenty-· five per cent, (p) in the case oi any other financial corporation, ten per cent, of the total income carried to such reserve account: " 12 in section 43 of the income-tax act, to clause (1), the follow-, !ng proviso shall be added, namely:- amendment of section 43"provided that where the actual cost of an asset, being a motor car ~cquired by the assessee after the 28th day of februery, 1966, exceeds twenty-five thousand rupees, the" cess of the actual cost -over such amount shall be ignored,  the actual cost thereof shall be taken to he' twenty-five thousand "   rupees  ·13 in section 45 of the income-tax act, sub-sections (2), (3) and amendm~nt of ) shall be omitted sedion 45  if in section 55 of the income-tax act, in sub-section (2), amendment of (iv) shall be omitted section 55  15 in chapter via of the income-tax act,-amendme:'lt of be chapter v!a (a) below the heading, the following sub-heading shall inserted, namely:-"a-deductions in respect of certain pa'!lments"; (b) in section boa, in sub-section (2), in sub-clause (ii) of "clause (a), for the word "; or" occurring at the end, the words "notwithstanding that such contract contains a provision for the exercise by the insured of an option to receive a cash paylit in lieu of the payment of the annuity; er" shall be su~ stituted; (c) after section bod, the following sub-heading and section shall be inserted, namely:- "b-other deductionsroe (1) in the case of a company to which this section dftduction applies, where the total income (as computed in accordance ~ ~~~ with the other provisions of this act) includes any pro·fits and gains and gains attributable to the business of generation 01' dis- ~~~fted tribution of electricity or any other form of power or of industries m the case construction, manufacture or production of anyone at more of certain of the articles or things specified in the list in the fifth companies schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent thereof, in computing the total income of the' company (2) this section applies too (a) an indian company; or \\ l!,  '~ff:"  (b) any other company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) \\ithin in~ia, i  but does not apply to any indian company referted to j'n clause (a), or to any other company referred to in clause (b) if such indian or other comp:my is a company referred to' in section 108 and its total income as computed before applying the provisions of sub-section (i) does not exceed ~,; ' twenty-five,thousanc;l rupe~;':'" "<:'" ~, "  16 in section 85a of the income-tax act-· (a) in the proviso,-amend ment 01 ~­section 8sa (i) the words "w~olly or" shall be omitted; , , (ii) for the words, figures and brackets "the list in para-  graph 2 of the third schedul~ t6'- the companies (pro~ts) surtax act, 1964", the words' "the list in the fifth schedule" shalfbe{substltuted;; ''1~',~,~{ ~,t :1'· -:;,)t : j  ~, - ~  :; ':' (b) ipthe explanation, for the :words, figures and brackets "the  list in paragraph 2 of the third' schedu~e to the'- companies (profits) surtax act, 1964", the words' "the list in the fifth schedule" shall be substituted 11 after section 85a of the income-tax act, the following sections i shall be ins~rted, namely:-1 j insertion , ot new sections 85b and 85e deduction· : "85b wh,ere' shares in a company which is neither an of tax  on clivi  -!)·~indian company nor a company which has made the prescribed ciends'  arrangements for the declaration and, paymejnt of, 'dividends received·· [rom ,i!:: 'i-; ~  withinjndia (hereafter, in thic; section  referred to as th~ foreign ;~;!i: ' company) have been allotted to-an assessee, being an indian companies company, in consideration of any patent, invention, model,  design, secret formula or process, or similar property right, or  'f' information concernin,l:( jndustrial, commercial or ~cientific knowledge, experience or skill made available or provided or agreed to be made available or provided to the foreign company by the assessee, or in consideration of technical services tendered or agreed to be rendere~ to the foreign company by the' assessee, under an agreement approved by the central government in this behalf before the 1st day of ocfober of the relevant assessment year, and any income by way of dividend on such shares is included in the total income of the assessee, the assessee shall be entitled to a deduction from the i,ncome-tax with which" it is chargeable on its total income for the assessment year of <;,;<,'" tej':;"''§o much of the amount of income-tax calculated at the average     ' -of incom~tax on the income by way of dividend so included ' j ~;~;'41 ' cis the·-twio~t of, ~ejlty-fl~, ~r: cent thereo~:;,·  ,:· :;,(  ~'  ~_)ti"{j, ;", , 85c where the total income of an assessee', being an indian deduction  1 d ' b f it ,', of tax on ,  company, mc u es any mcome y way 0 roya y, com~lsslon, royalties, fees or any similar payment received by it from a company which etc • receiv-i d· h' h h d ed from is neither an n ian company nor a company w lc as rna e certain  c the precribed arrangements for the declaration and payment for~ign  j  - compames of dividends within india (hereafter, in this section, referred to as the foreign company) in consideration for the use of any patent invention, model, design, secret formula or process, or similar property right, or information concerning industrial, 10 commercial or scientific knowledge, experience or skill made availablf' or provided or agreed to be made available or provided to the foreign company by the assessee, or in consideration of technical services rendered or agreed to be'· rendered to the - foreign company by the assessee, under an agreement approved 15 by the' central government in this behalf before the 1st day of october of the relevant assessment year, the assessee shall be entitled to a deduction from the income-tax with which it is chargeable' on its total income for the assessment year of so much of the amount of income-tax calculated at the average rate of 20 income-tax on the income so included as exceeds the amount of twenty-five perce'nt thereof" 18 in scction 86a of the income-tax act, for the wor,gs "twenty- amendfive" the words "twenty-seven and a ,half" shall be substituted ment,t of ,  sec ion cj6a 19 in section 88 of the income-tax act, in clause (a) of sub-section a d men -25 (1), for the words "twenty-five", the words "twenty-seven and a ment of half" shall be substituted section 88 20, in section 104 of the income-tax act,-(n) in sub-section (1) ,-amendment of sect ioc 10-1 (i) for the words, brackets and figure-30 -"on the distributable income as reduced by-(i) the amount of dividends actually distributed, and", tlie words "on the distributable income as reduced by the amount of dividends actually distributed, if any" shall be substituted; 35 (ii) clause (ii) shall be omitted; (b) in sub-section (4),-(i) in clause (a), for the words "wholly or mainly" the words "mainly in the construction of ships or" shall be substituted; (ii) after clause (b) the following clause shall be inserted, namely:-"(c) a company which is neither an indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within india"; (iii) in the explanation, after the words "consist mainly in", the words "the construction of ships or in" shall be inserted  21 in section 109 of the income-tax act,-amendmellt of section 109 (a) in claus~ (i), after sub-clause (f), the following sub---clauses shall be inserted, namely:-- (g) any expenditure actually incurred for the purposes of the business, but not deducted in computing the income chargeable under the head "profits and gains of business or profession" being- (1) a bonus or gratuity paid to an employee, (2) legal charges, (3) any such expenditure· as is r~ferred to in clause (c) of section 40, (4) ·any expenditure claimed as a revenue expenditure but not allowed to be deducted as such and not resulting in the creation of an asset or enhancement in the value of an existing asset; (h) any expenditure wholly and exclusively incurred for the purpose of making or earning any income (other than income chargeable under the head "profits and gains of busi-  ness· or profession") included in the total income but not· allowed to be deducted in computing such income and not resulting in the creation of an asset or enhancement in the value of an existing asset;' ; (b) for clause (ii) t the following clause shall be substituted, namely:-c (ii) "investment company" means a company whose total income consists mainly of income which, if it had been the income of an individual, would have been regarded as unearned income explanation-in this clause, the expression "unearned income" has the meming assigned to it in the· finance act of the relevan~ year;' ; te) in clause (iitl), the words ''wholly ~rn shall be omitted; (d) for sub-clause (iii) (3), the following shall be substituted, namely:-"(3) in the case of an indian company [not being an indian company which falls under the provisions of clause (a) of sub-section (4) of section 104], a part only of whose total income consists of profits and gains attributable to the business of construction of ships or of manufacture ~r processing of goods or of mining or of generation or distribution of electricity or any other form of power-(a) in relation to the profits and gains nil: attributable to such business (b) in relation to the remaining part of its total income-(1) if it is a company which satisfies 90%; the _ conditions specified in sub-clause (4) (a) of this clause (2) in any other case 60% ' explanation-the· provisions of this chapter shall, in relation to  remaining part of the total income aforesaid, apply as if such were the total income of the company; and, for the purposes of  uh 104, the amount of dividends actually distributed shall be ~q,c:~eiileq to be such proportion thereof as the part aforesaid bears to total income of the company;" 22 in section 112a of the income-tax act, the existing explana- amend-j~~ucm shall be re-numbered as explanation 1 and after explanation 1 ment of so re-nurpbered, the following explanation shall be inserted, ~~~~n ly:- '  ",'fl" , 'explanation 2-for the purposes of this section and sections 112, 114 and 193, "national savings certificates (first issuet' includes "national savings certificates (first issue)-bank series"'  23 in section 114 of the income-tax act, in sub-clause '::clause (b), the third proviso shall be omitted (ii) of amendment of section 114 24 in section 115 of the income-tax act,-(a) clause (i) shall be omitted; amendment of section 115 (b) in sub-clause (b) of clause (ii), the brackets, words and figure "[excluding capital gains, if any, referred to in clause (i)]" shall be omitted;  (c) in clause (iii), for the words, brackets and figures "in clauses (i) and (ii) ", the words, brackets and figures "in clause (ii)" shall be substituted amend-25 in section 193 of the income-tax act, in the proviso, after clause ~~ri~;i93 (iii), the following clause shall be inserted, namely:-5 "(iv) any interest p~yable on any other security of the central or state government, where the security is held by an individual, not being a non-resident, and the holder thereof makes a d~1aration in writing before the person responsible for paying the interest that-10 (a) he has not previously been assessed under 'this act or under the indian income-tax act, 1922; 11 (b) his total income of the previous year in which the interest is due is not likely to exceed the maximum amount not chargeable to tax; and 15 (c) the total nominal value of the securities held by him (including such securities, if any, as are held on his behalf by any other person) did not exceed two thousand five hundred rupees at any time during the said previous year" an1podment of section 201, 26 in section 201 of the income-tax act,-20 (a) in sub-section (1), in the proviso, for the word "wilfully", the words "without good and sufficient reasons" shall be substituted; (b) after sub-section (1), the following sub-section, shall be inserted, namely: -25 u(la) without prejudice to the provision~ of sub-section (1), if any such person, principal officer or company as ~s referred to in that sub-section does not deduct or after deducting fails to pay the tax as required by or under this act, he or it shall be liable to pay simple interest at six per 30 cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid"; (c) in sub-section (2), for the words "it shall be a charge", the words brackets, figure and letter "the amount of the tax 35 together with the amount of simple interest thereon referred to in sub-section (la) shall be a charge" shall be substituted amend-27 in section 235 of the income-tax act, in sub-clauses (i) and ment of ( •• ) f 1: (b) f th ds u ty fi " th section 23~" oc ause , or e wor iowen - ve, e words "twenty- seven' and a half" shallt"besubstituted ,~" 28 in ,section 236a of the income-tax act,-(a) in sub-section (f), for the words, figures and letters ~n "the 1st day of april, 1964", the words, figures and letters "the 1st day of april, 1966" shall be substituted; s (b) for sub-section (2), the following sub-section shall be substituted, namely:-10· - "(2) the amount to be given as credit under sub-section (1) shall be a sum which bears to the amount of the tax payable hv the company under the provisions of the annual finance act with reference to the relevant amount of distributions of dividends by it the same proportion as the amount of the dividends (other than dividends on preference shares) received by the institution or fund from the company bears to the total amount of dividends (other than dividends on preference shares) declared or distributed by the company during the previous year ezplanation-in sub-section (2) of this section and in section 280zb, the expression "the relevant amount of distributions of dividends" has the meaning assigned to it in 20 the finance act of the relevant year" 29 in section 280a of the income-tax act, after the existing pro- anlejid-"viso, the following second proviso and the 'following explanation ~~i~'nof shall be added, namely:-280a 'l?rovided further that nothing contained in this chapter 2$ sh&~l apply in the case of a person whose total income· ~f the p~evious year relevant to the assessment year commencing on the 1st day of april, 1967; or any subseque~t year, does riot exceed twenty-five thousand rupees, unless such person has, not ~~ter than the 30th day of september of the financial year 30 immediately preceding the assessment year, by notice in writing to the income-tax officer, declared (such declaration being final for that assessment year and all assessment years there'after) that the provisions of this chapter shall apply to him explanation-in this section and in sections 280e, 280f and 3s 280h, the expression "total income" means the total income computed without making any allowance under section 2800'   ' men t of section 280e substjtu 31 for section 280q of the income-tax act, the following section don of new  section for shall be substituted, namely:-section 280q / roundjn, off "280q the amount of any deposit to be made under this chapter shall be rounded off to the nearest multiple of ten' rupees and for this purpose any part of a rupee consistidg of s paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the ne¥t higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which 10 is a multiple of ten: ! i - provided that where the amount so computed is required under any provision of this chapter to be deposited in two or more equal instalments and the amount of each instalment calculated for this purpose is not a multiple of ten rupees, the amount of each such instalment, other than the last instalment, 15 shall be rounded off to the nearest multiple of ten rupees and the balance shall be the amount of the last instalment" amendmental section 280x 32 in section 280x of the income-tax act, after sub-section (1), the following sub-section shall be inserted, namely:-20 "(1a) notwithstanding anything contained in sub-section (1), a depositor, being an individual who is more than seventy years of age on the last day of the previous year relevant to any assessment year and who has not exercised the option in accordance with the provisions of sub-section (1), may, on or befo~e 25 the 30th day of june of the assessment year, by notice in writing to the income-tax officer, declare (such declaration being final for that assessment year and all assessment years thereafter) that the provisions of this chapter shall not apply to him and if he does so, the provisions of this chapter shall not apply to him 30 for any assessment year in relation to which such option has effect: i ! provided that where any such depositor satisfies the incometax officer  that he was prevented by sufficient cause from making such declaration on or before the date aforesaid, the 3s income-tax officer may, with the'previous approval of the ~ting assistant commissioner, allow such depositor to di~ the dee1aration at any time &!ter the said ~te" in section 289zb of the income-tax act, in explanatio~ z, for =~ entence beginning with the ~otds "the amount of income-tax section - __ ujic by the company" and ending with the words "during the 280 zb iin!vic)us year or any previous year prior to that year", the following it'1ljall be substituted, namely:-'''mle amount of income-tax payable by the company for ,  any assessment year shall be computed after making allowance for any relief, rebate or deduction in respect of income-tax to  which the company is entitled under the provisions of this act  ot:' the annual finance act and after deducting from such amount of income-tax-(a) the amount of additional income-tax, if any, payable by the company under the provisions of section 104; and (b) (i) in respect of the assessmeht year commencing on the 1st day of april, 1965, the amount, if any, by which the rebate of income-tax admissible to the company under the provisions of the finance act, 1965, is, under the provisions of the said act reduced with reference to the face value of any bonus shares or the amount of any bonus iss1,1ed by the company to its shareholders durin~ the previous year or any previous year l>rior to that year or with reference to any amount of dividends declared or distributed by it during the previous year or any previous year prior to that year;· or (h) in respect of the assessment year commencing on the 1st day of april 1966, or cmy subsequent assessment year, the amount of income-tax, if any payable by the company under the provisi('lns of the annual finance act with reference to the relevant amount of distributi'ons of diyidends by it" 34 after section 288 of the income-tax act, the 30 tions shall be inserted, namely:-following sec- insertion of nt"w sections 288a and 288b -  3s'288a (1) subiect to the provisions of sub-section (2) the !~u~tinr amount of total income computed in accordance with the fore- inccme  going provisions of this act shall be rounded off to the ~earest multiple of ten rupees and for this purpose any part of a rupee consistin,:t of paise shall be i~oredand thereafter if such amount is not a multiple of ten then if the last fitrure in that amount is five or more the amount shall be increased to the next hi~her amount which is a multiple of ten and if the last fi~re is lesr than five, the amount shall be reduced to the next lower amount which is a multiple of ten; and the amount so rounded off shall be deemed to be the total income of the assessee tor~h~ pui-p<?ses  of this act   , (2) if the total income of the assessee includ~s ea~ed , }ncome chargeable under any head, the adjustment -, under~ s~~ , sect jon (1) shall, to the extent possib~e, be made in computing s such earned income and, as to the balance, it" any, ·against any other income; and if there is no earned income, 'the ' , adj~'stment  ~ha11 be made in computing any other income under ~n'y head e~lanation-in this section,  the _ expression "eai?:led in,· come" has the meaning assigned to it in the finance ali ,of the 10 relevant y~ar  , ~ rounding off of tax, etc  288b: the' amount of tax (including tax dedw:tlble at source , or payable in advance), interest, penaltyl fln~ qt: ,any other sum payable, and the amount of refund d~el und~r t~e p'rovisions of  this act shall be, rounded off to the nearest rupee ~d, for this is purpose, where, such amo,unt contains a part  of a rupee con- sisting of paise, then, if such part, is fifty' paise or more, it shall  be increased ,t~ one rupee and if such par~ is less ih~ fifty paise, ~t shall be ignored' , , amend- ss in section 297 of the income-tax 'act, in ,cisuse (l) of sub- 20 ~~~~nofa97· section' (2), after the word and figures "'section' 60", the w~rds, figures and'letter "or section 60a" shall be, and shall be deemefl always te , -h~v~ been, inserted amend-- 36 in the first schedule to the ihcom~:tax act,' in' rule 3, iii -~~~i of - '-tlause (e) for the words j'twenty-five", the words "twenty-seven and 2s schedule -a' hair'- shall' be 'substituted, 37 (1) in the fifth schedule to the income-tax act,-amel"'dmerit of fifth schedule (a) for 'the b~ackets words, figures and iefter "[see' section 33(1)(iii)(c)]", the following shah 'be substituted; nam~'ly: -' u[see sections 33 (1) (iii) (c), 80e and 85a]"; 30 ' (p) in !teji?, (16), ,after the word "p~~p~'! tj:le w?rds "including n~wsprint" shall be inserted; , - - - - 0-(c) after item (25), the following items shall be, inserted, namely:-"(26) tea , )' (27) printing machinery"    (2) for th~ purposes of sub-section (1) of section 33 of the said act; -the amendments made by claus~s, (b) and (c) shall have effect in ' j;~ect, of machfnery or-plant installed after the 31st day of'muc~ tr1_ r • ,  _ - :'" :, ' - _, - •• -  ",~ - - ( " /~~lc:(~"'  -' \  '-'_ r'  1', ,  po"f ,,~ " ·)t~i\u~ ~,:   ~  ~ ' ~ i - - -- amend- ment (a) in section 9, in sub-section (1), for the words "one year", of act 3 of 1953 the words "two' years" shall be substituted; '(b) in ¥ction 10, in the proviso, for the words "one year", the words "two years" shall be substituted;  (c) in section 11, in sub-section (2), for the words "(;me year", wherever th~y occur, the words "two years" shall be substituted; f f' ": '" if t, (d) in section 12, in the proviso to sub-section (1), for the ~  ,' , ~ords "one yeat", the words "two years" shall ~e substituted;  'jo  '" :' ' "·~~i'· (e) in section 22, for the words "one year", the words "two years" shall be substituted; (f)  in section 33, in sub-section (1) ,-(i) in clause (b), for the words "one year", the words "two years" shall be substituted; ;~{ 'i', ' '  "  ~, - • }-, ··tf · - (ii) after clause (m), the following clause shall' be, and shall be deemed to have been, inserted with effect from the 1st day of april, 1965, namely:-- t ' ~"'""  "   "(mm) property belonging to the deceased whowas a member of any police force (including a border secllrity force) and was killed in any action in protecting the border'''' i 'l~~': nor '" : "  , f"~ 1'0 -  " " , ,  (g) in section 34, in clause (a)' of sub-section (1), after the brackets and letter "(m)", the brackets and letters "(mm)" shall be, and shall be deemed to have been, inserted with effect from the 1st day of april, 1965;  (h) in section 46, in sub-section (2), for the words "one year" the words "two years" shall be substituted; (i) in the second schedule, for part i, the followin~ part shall be substituted, namely:-"part i f  in the case of any property whic~ passes or is deemed to pass on -the death of the deceased----nil; ~s (1) where the principal value of the !-  estate does not exceed rs 50,000  ft) where the principal value of the ','  ~te exceeds rs 500qo ~ut doeli l:  aat ~qee4 rf l,qq • ooq 4 per cent of the 3mount by which the principal value of the e:;;tate exceed, rs 50,000: rs 2,008 pi 10 per cent ef the amount by which the principal value of the estate exceeda rs 1,00,000; (3) where the principal value of the estate exceeds rs 1ro,{loo but does not exceed rs 2,00,000  (4) where the principal value of the estate exceeds rs 200000 but do~s not exceed rs 3,50,000 (5) where the principal value of the estate exceeds rs 350,000 but does not exceed rs 500,000 (6) whexe the principal value of the estate exceeds its 5,00,000 but does not exceed rs 10,00,000 (7) where the principal value of the estate exceeds rs 10,uo,000 but does not exceed rs 15,00,000 ri 12,000 plu 15 per cent of the s lldlount by which the principal value of the eo;tate exceed rs 2,00,000; rs 34,500 plus 25 per cent of the amount by which the principal 10 value of the estate exceeds rs 3,50,000; tts 72,000 pi so per eent ot the amount by which the principal value of the estate exceed is rs 5,00,000;  as 2,22,000 plus 40 per ·cent of the amount by which the principal value of the estate exceech as 10,00,000; ·20 (8) where the principal value of the estate exceeds rs 1500,{,qo but does not exceed rs 20,00,000 r;; 4,22,000 plus 50 per cent ot the amount by which the principal value of the estate exceeds  rs 15,00,000; (9) where the principal value of the estate exceeds rs 20,00,000 rs 6,72,000 plus 85 per cent of the 2 s amount by which the principal value of the estate exceed rs 20,00,000" transitional provisions 39 in the case of persons dying on or after' the 1st day of april, 1966, but before the 1st day of april, 1967, sections 9, 10, 11, 12, 22, 3330 and 46 of the estate duty act, 1953, as amended, respectively, by clauses (a), (b), (c), (ci) and (e), sub-cia tis e (i) of clause (f) and clause (h) of section 38, shall have effect" as ·if references therein to the two years before the death of the deceased were references to the said two years less so much thereof as fell before 3' the 1st day of april, 1965 40 the expenditure-tax act, 1957 is hereby repealed repeal of act 29 ot 1957 41 in the gift-tax act, 1958,-(a) in section 5,-amendment of act 18 of 1958 (i) in sub-section (1), after clause (ii), the following 40 clause shall be inserted, namely:-'(iia) being an individual who is not resident in india to any person resident in india, of foreign currency or other foreign exchange [as defined, respectively, in clause (c) and clause (d) of section 2 of the foreign 4s exchange regulation act, 1947] remitted from a country 1 outside india in accordance with the provisions of the sajd act, alld any rules made thereunder, during the period commencini on the 26th day of october, ·1961' anci ending on the 28th day of february, 1966, or such later date as the central government may, by notification in the official gazette, specify in this behalf explanation-for the purposes of this clause, the expression iiresident in india" shall have the meaning assigned to it in the income-tax act;'; (ii) in sub-section (2), for the words "five thousand", the words "ten thousand" shall be substituted; (b) section 6a shall be omitted; i:" (c) for the schedule, the following schedule shall be substi-" ,': tuted, namely:- "the schedule [see section 3] rates of gift-taxi) per cent of the value of such gifts where the value of all taxable ·gifts does not exceed rs 15,000 rs 750 plus 8 per cent of the :lmount by which the value of such gifts exceeds rs 15,000 ,where the value of all taxable  gifts exceeds rs 15,000 but does ,'not exceed rs 40,000 ; where the value of all taxable  gifts exceeds rs 40,000 but does not exceed rs 90000 rs 2,750 plus 10 per cent of the amount by which the value af such gifts exceeds rs 40,000 rs 7,750 plus 15 per cent of the amount by which the v&lue of such gifts exceeds rs 90,000 where the value of all taxable gifts exceeds rs 90,000 but does not exceed rs 1,40,000 j,·,i   1  :;  6  ,) where the value of all taxable \:i,:' , eifts exceeds rs 1,40,000 but does i' ,- not exceed rs 1,90,000  ~"'-rs 15,250 plus 17·5 per cent of the amount by which the value of such gifts exceeds rs 1,40,000 -  -;~-:,\ 8): where the value of all taxable 30-\ gifts exceeds rs 190,000 but does not exceed rs 3,40,000 rs 24,000 plus 20 per cent of the amount by which the vnlue of such gifts exceeds rs 1,90,000 "y:,\-(7)- where thp value of all taxable rs 54,000 plus 25 per cent of the amount by which the va) lie of such gifts exceeds rs 3,40,000 ,,~j;(~ juts exceeds rs 3,40,000 but does ,:(,,-not exceed rs 4,90,000 ii,· ' 5s (8) wbere the value of all taxable ;~  '{il' - ,~1fts exceeds rs 490000 but does ';~~~ not exceed rs 9,90,000 ~~:: (9) where the value of all taxable  litts exceeds rs 9,90,000 but does ~;_ not exceed rs 1490000 (10) where the value of all taxable lifts exceeds rs 1490,000 rs 91,500 plus 30 per cent of the amount by which the value of such gifts exceeds rs 4,90,000 rs 2,41,500 plus 40 per cent of the amount by which the value of such ~ifts exceeds rs 990,000 rs 4,41  500 plus 50 per cent of the amount by which the value of iuch gilts exceeds rs 14,90,000"  u the super profits tax act, 1963 is hereby repealedrepeal of act 14 of 1963  43 in the companies (profits) surtax act, 1964,-(a) in the first schedule, in clause (i) of rule 2,l -\mendment of act 7 at 1964 (i) for sub-clause (b), the following sub~e shall be substituted, namely: -'  ,,: s '(b) the amount of income-tax, if any payable by the company under the provisions of the annual finance act with reference' to the relevant amount of distributions of dividenas by it explanation-in this sub-clause, the expressi~n "the 10 relevant amount of distributions of dividends" has the meaning assigned to it in the finance act of the relevant year;'; (ii) after sub-clauc;e (b), the following sub-clause shall be, and shall be deemed always to have been, inserted, is' namely:-'(c) the amount of income-tax, if any, payable b~ the company under section 104 of the income-tax act explanation-in relation to the assessment year :'ommencing on the 1st day ~f april, 1964, the reference 20'  10 this sub-clause to "income-tax" shall be construed as a reference to "super-tax";'; (b) in the third schedule,-(i) in paragraph 1,-(1) for the figures and words "40 per cent", ·the 2s figures and words "35 per cent" shall be substituted; (2) the first and second provisos shall be omitted;· (3) in the third proviso,-(a) for the words "provided further", ~ word "provided" shall be substituted; 30  ~  (b) in clause (a), the words uafter deducting from such amount of income-tax the amowlt, if any, by which the rebate of income-tax admissible to the company under the provisions of the annual finance act is, under the provisions of the said act, reduced with reference to the face value of any bonus'shbfe5 or the ',amount of any bonus issued by the company to tis' shareholders during the previous year or -y previous year prior to that year" shall be omitted; (ii) paragraph 2 shall be omitted  chapi'er vindirect taxes  ~ ,~~ , 44_ (1) in the case of goods chargeable with a duty of customs !=~t ~' which is specified in the first schedule to the indian tariff act, customs   1, 1984 (hereinafter referred to as the tariff act), or in that schedule '8t ,as amended by a subsequent central act, if any, or in that schedule-,tr-ro'read \\ith any notification of the ce'ntral government for the time <  being in force, there shall be levied and collected as an addition to, ~, ;:and in the same manner as, the total amount so chargeable, a ~  '  /:;special duty of customs equal to 10 per cent 'of such amount: ,~:~ provided that in computing the total amount so chargeable,1 any t;i~uty ch~g~able under ~ction 2a of, the· tariff a'ct or section 45 ~: of thi~ act shall not be included ", ';-;'  '~~' (2) sub-section (1) shall cease to have effe'ct after the 31st day !~  i' '    if(;j-f may, 1967 except as respects things done 6roiriitted to be done :7 ,;,t before such cesser; and section 6 of the general clauses act, 1897 ,~shall apply upon such cesser as if the said sub-section had then been :1 l lr'epeal ed' by a ceritral act ''-;1'", ~ ;~" ' 45 (1) with a view to regulating -or bringing greater economy regulatory ~'? ~in imports, there shall be levied and collected, with effect from such !:~~ , ,date,~nd at such rate, as may be specified· in,  this· behalf by the "~ central government by notification in the official gazette, on all or  any of the goods mentioned in the first schedule to the tariff act ~,,":o:, or in that schedule as amended by a subsequent central act, if any, ~:;! ,a regulatory duty of customs not exceed\ng-' (1i~, ~;;;+, (4)' 25 per cent of the rate, it any, specified in the said first 30 schedule read with any notification issued under section 3a or sub-section (1) of section 4 of the tariff act; or \~~ whichever is higher: j "~ (b) 10 per cent of the value of tl~eg9<?ds as determined in i: accordance ~ith the provisions of section 14 of the customs act, i·, 1962; ,:- " 'provided that different dates and different :rates may be specified r by the central government for diffe'rent kinds of goods ~r (2) sub-section (1) shall cease t? have effect after t~e 15th day f of july, 1967, except as respects thmgs done: ()r omitted to be done before such cesser; and section 6 of the general clauses act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a central act (3) the regulatory duty of customs leviable under this section in respect of any goods referred to in sub-section (1) shall be in ad- 5 dition to any other duty of customs chargeable on sueh goods under the customs act, 1962 ( 4) the provisions of the customs act, 1962 and the rules and regulations made thereunder, including those relating to refunds and  exemptions from duties, shall, as far as may be, apply in relation to 10 the levy and collection of the regulatory duty of customs leviable under this section in respect of any goods ~ they apply in relation to the levy and collection of the duties of customs on such goods under that act or those rules and regulations (5) every notification issued under sub-section (1) shall, as soon is as may be after it is issued, be placed before each house of parliament  46 in the indian tariff (amendment) act, 1949, in sections 4 and 5, for the figures "1966", the figures "1967" shall be substituted 47 in the central excises and salt act, 1944 (hereinafter referred 20 to as the central excises act), in the first schedule,-amendment of act 1 of 1949 amendment of act 1 of 1~44 (a) in item no1, for the entries in the third column aga~st sub-items (1) and (2), the entries ''thil"ty rupees and fifty paise per quintal" and "fifteen rupees per quintal" shall, respectively be' substituted; 2s (b) in item no 4,-(1) under trl unmanufactured tobacco-", for the entries in the third column against sub-items (1), (2) and (4), the entries "three rupees and twenty paise", "twenty-five ~ees" and "~o rupees and sixty paise" shall, respective- 30 ""-,~ substituted; (2) under llii manufactured tobacco-"i for the entries in the third column against sub-items (1) (i), (1) (vi), \ (1) (iii) and (1) (iv), the entries "twenty rupees", "twelve rupees", "four rupees" and "one rupee" shall, respectively, 35; be substituted; i ,  (c) in item no9, for the entry in the third column, the , entry "one hundred and ninety-five rupees per metric tonne"  ,,:,,: ~~ be substitu~~~~  (d) after item no lid, the following item shall be inserted, namely:-fifteen "per cent ad vllorem"; "lido synthetic organic pro-ducts of a kind used as organic luminophores; products of the kind known as opi'ical bleaching agents, substantive to the fibre (e) in item no 14h, for the entry in the third column against sub-item (iv), the entry "one rupe'e per kilogram!' shall be substituted; (1) after item no 15a, the following item shall be inserted, namely:-ten per cent ad valorem"; "15aa organic surface-active agents (other than soap); surface-active preparations and washing preparations, whether or not con-taining soap (g) in item no 18, for the entry in the third column, the entry "twelve rupees per kilogram" shall be substituted; (h) in item no 18a, for the entries in the third column against sub-items (1) and (2), the entries "one rupee and fifty paise per kilogram" and "sixty paise per kilogram'~ shall, respectively, be substituted; (i) in item no 19,-(1) for the entry in the third column against each of the sub-items (1), (2) and (5), the entry "eighty paise per square metre" shall be substituted; (2) for the entry in the third column against each of the sub-items (3) and (4), the entry "sixty paise per square metre" shall be substituted; ;'f" ;l:30 ~,' ,j' - (j) in item no 26aa,-'~ • -·'·" "'~~~ i1:~ '\·r" -~"'''' (1) the word "flats" occurring in the entry in the second column against sub-item (ia) shall be omitted; i' i ,: 35 ',/-' " (2) for the words "skelp and strips" occurring in the entry in the second column against sub-item (iii), the word~ ''flats, &kelp and strips" shall be substituted; '(3) for the 'entry in the -third column against sub-item (iv) , the entry "fifteen per cent ad valorem ,plus the excise duty for the time being leviable on pig ir<;>nor steel ingots, as the' case may be" shall be substituted; (k) in item no 33b,-s (1) for the entry in the second column against subitem (i), the following entry shall be substituted, namely:-"insulated wires and cables of copper, aluminium or other metals and alloys, whether sheathed or unsheathed, the conductor of any core of which, not being 10 one specially designed as a pilot core, has' a sectional ' area not exceeding 1·5 square millimetres in the case of copper, or not exceeding 2·5 square,millime1res in the case of aluminium or of not more than equivalent conductivity as of copper in the case' of other metals and is alloys"; (2) the following explanation shall be inserted at the encl ~mely,:-'"  'explanation-the expression "electric wires and cables, all sorts" used in this item shall not include 20 square or rectangular conductors', whether insulated or not' ' :: special duties of excise on certain eoods 48 (1) when goods of the description mentioned in this section' chargeable with a duty of excise under the central excises act (as amended by this act or any ~ubsequent central act) read 25 with any notification for the time being in force issued by the central government in relation to the duty so chargeable, are assessed to duty, there ~hall be levied and collected-(a) as respects goods comprised iii items nos 6, 8, 9, 14d, 22a, 23a except sub-item (1) thereof, 23b, 28,29, sub-items (2) and (3) 30 of item no 31 and item no 32 of the first schedule to the central excises act, a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods; , (b) as respects goods comprised in items nos 2, 3(1), subitems i, ii (2) and ii (3) of item no4, items nos 13,1, 14f, 15, 35 15a, 15b, 16, 16a, 17, 18a (2), 21, 22, 23, 23a (1), 27, 30, 31 (1), 33, sub-items (1), (3a) and (4) of item no 34 and item no 37 of that schedule, a special duty of excise equal to 20 per cent of the t<?tal amount so chargeable on such goods~ ~nd , (c) ,as respects goods comprisedm ite~ ,?frs,i''~ (1) j 18, 4q 18a(1), l8b" 2q, ~a ~i\i ~teqlf, ~~},-and~(~l\'~ljltepl no 34 '  - •• - •  '   -"-o"'1 - uj ,: ~  ! , ~" '" " special duty of e'xcise equal to 331 per ·cent of the total amount :,~ so chargeable on such goods ':\1,:<;'" ,,! (2) sub-sec~ion (1) shall ce~se to have efte~ after the 31st day of '~i~ ii,y, 1967, except as respects thmgs done or omitted to be done before i:ir:~ fjilch cesser; and section 6 of the general clauses act, 1897 shad i~  :'~" epply upon such ,cesser as if the said sub-section had then been re-:/~", ~led, by ~ ~tral act  ~2~:' (3) the duties of excise referred to in sub-section (1) in respect of :~% 10 the goods specified therein shall be in addition to the duties of excise ~it f  ~,' chargeable on such goods under the central excises act 'or any ~ other law for the time being in force and such special duties shall be ~;, ~vied for purposes of the union and the proceeds thereof shall not t:' be ,distributed among the states  ~"",j5' (4) the provisions of the central excises act and the rules made "t i thereunder, including those relating to refunds,and exem,ptions from duties, sha1l1 as far as may be, apply in relation to the levy and collection of the duties of excise leviable under this section in respect of ,any goods as they apply in relation to the levy and collection -of the r \'20 duties of excise on such goods under that act or those rules 49 (1) with a view to regulating ·or bringing greater t!con~m,y, in regulatory consumption, there shall be levied and collected, with effect from ~~~~ of such date, and at such rate, as may be specifiedin tbt!i behau by the central government by notification in the omdal· g~etie" on all or 25 any of the goods mentioned in the first schedule to the central excises 'act as amended by this actor any 'subsequent central act, a regulatory duty of excise which shall not exceed 15 per cent of the value of the goods as determined in ~ccordance with the provisions of section 4 of the central ex~ses act:  30 provided that different dates and different rates may be specified by the central government for different ~nds of goods: (2) sub-section (1) shall cease to have effect after the 15th day of july, 1967, pxcept as respects things 'done or omitted to be done before such cesser; and section 60f the general clauses aet, 1897 35 shall apply upon' such cesser as if the saidsub-$ection had then been r~pealed by ,a central act (3) the duties of excise referred to iii sub-s~tion (1) in respect of the goods specified then!in shall be in addition to the duties of excise chargeable on such g~ under the central excises act or 40 any oth~ law for the time ~ m fqvc~ :andauoh ~ary dutiea shall be levied for purposes of the union and the proceeds thereof shall not be distributed among the states (4) the provisions of the central excises act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collec-s tion of the regulatory duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that act or those rules (5) every notification issued under sub-section (1) sl;tall, as soon 10 as may be after it is issued, be placed before each house  of parliament disconu-50 for the year beginning on the 1st day of april, 1966, no duty ~~l~n~~t~~ under t~ central excises act, or the tariff act shall be levied in respect of salt manufactured in, or imported into, india  chapter vi miscellaneous51 (1) in the central sales tax act, 1956,-amendment of act 74 of 1956 '(a) in section 8, in sub-section (1) and in sub-section (za), for the words· "two per cent", 'wherever they occur, the words 20 "n:~ee p~r cent" shall be substituted; (b) in section 15, in clause (4), for the words "two per cent", the words "three per cent" shall be substituted  (2) the amendments by sub-section (1) made ·in the central sales tax act, 1956 shall take effect on and from the 1st day of july, 2s 1966 52 in section 4a of the preference shares (regulation of divi-amendment of af't 63 of 196n d~nds) act, 1960, for the words "such deduction shall in no case exdeed twenty-five per cent of the stipulated dividend", the following words, figures, letters and brackets shall be substituted, namely: -30 "such deduction made by the company from any dividend declared after the 28th day of february, 1966 shall in no case ~eed twenty-seven and a half per cent of the aggregate of-(i) the stipulated dividend, and t~, (li) an amount equal to eleven per cent of the stipulated 35  ~', :~ :"; diyiaend', i'" speclbjed, in ·suj>tedion  (3) of settlon; 3"   1 :l j ( : •• "'c --til section 32 of the unit trust of iindia act, 1963, in sub-sec- anlend-· ··(1), for clause (b) and the explanation, the following clause and ~~~t5ff of  shall be substituted, namely: _ 19c3 , (b) where in the case of a unit-hol?er, being an individual, the income in respect of units received by him from the trust during the previous year does not exceed one thousand rupees, 81lch income, and where such income exceeds one thousand rupees, a sum of one thousand rupees, shall not be included in computing his total income of that year under the income-tax  ,~ act, 1961 explanation-in this clause, "previous year" has the same meaning as in the income-tax act, 1961 ;'    declaration under the provisional collection of taxes act, 1931it is hereby d,eclared that it is expedient in the public interest • , that the provisions of clauses 44, 46, 47 and 48 of this bill shall have n,i'~, • immediate effect under the provisional collection of taxes act, 1931 :i{>   '\ ' f'   the fmst schedule (see section 2) part i income-tax and surcharges on income-tax paragraph ain the case of every individual or hindu undivided family 01" unregistered firm or other association of persons or body of individuals, -whether incorporated or not, or every artificial juridical person referred to in· sub-cla\ise (vii) of clause (31) of section 2 of the incometax act, not being a case to which any other paragraph of this part  applies,~ - rates of income-~(1) where the 1ot&1 income rioes not exceed its 5,000 5 per cent of the total income; rs 250 plus to per cent of, the amount by which the total income exceeds rs 5,000; 10 (2) where the total income exceeds rs 5,000 but does not exceed rs 10,000 (3) where the total income exceeds rs 10,000 but does not exceed rs 15,000 rs 750 plus 15 per cent of the amount by which the total income exceeds its 10,000; (4) where the total income exceeds rs 15,000 but does not exceed rs 20,000 rs 1500 plus 20 per cent of the amount by which the total 15 income exceeds rs 15,000; rs 2,500 plus 30 per cent of the amount by which the total income exceeds rs 20,000; (5) where the total income exceeds rs 20,000 but does not exceed rs 25,000 (6) where the total· income l'ltceeds rs 25,000 but does not exceed rs 4000' plus 40 per cent -of the 20 amount by which the total income exceeds ri 25,000; ~3000e'  - 'i· (7) where the tot&1 income exceeds rs 30000 but· does· not exceed rs· 50,000 r& 6,000 plus 50 per cent of the amount by which the income exceeds rs 30,000; total 25 (8) where the total income exceeds rs 50,000 but does not exceed rs 70,000 rs 16,000 plus 60 per cent of the amount by which the total income exceeds rs 50,000; income exceeds amount by which the total 30 income exceeds rs 70,000: provided that for the purposes of this paragraph, in the case of a person, not being a non-resident-35 (i) no income-tax shall be payable on a total income exceeding the following limit, namely:-not (4) rs 6,500 in the case of every hindu undivided family which as at the end· of the previous year satisfies either of the following two conditions, namely:-(1) that it has at least two members entitled to ,~-~lli·~- ~;~ p~ition wh~ are not less th~ eighteen years' of 40 ~'' t, (,  -~n' " ~' , ,  ~ ,   'or ,,    ~_~, _,' ,  ><:  ~ (2) that it has at least two-members -entitled ·to claim  partition who are not lineally descended one from the other and who are not lineally' descended from any other living member of the family; (b) rs 3,500 in every other case; _ (ii) where such person is an individual or a hindu undivid-1' ed family, the income-tax computed at the rate hereinbefore specified shall be reduced by so much of the amount specified hereunder, as does not exceed the amount of income-tax 80 com-puted:-(a) rs 125 in the case of an unmarried individual; (b) rs 200 in tj1e caseqf,a married 'ndivl~ual who has no child m8lnly dependent' oil' him or' hindu undivided family which ba!! do minor coparcener; (c) rs, 220 in the case of a married individual who has one child mainly dependent on hun or a pundu undivided family which has one minor coparcener mainly supported from the income of such family; (d) rs 240 in the case of a married fntiividual  who has more than cme child mainly dependent on him nr a hindu undivided" family which has more - than one minor coparcener mainlv supported from the income of such family;  (iii) where the total income is twenty thousand rupees' _qr ;;:~ less, the income-tax payable shall not excee~ forty per cent of '~ the amount by which the total income exceeds the limit sp~cifi-s ed in sub-clause (a) or, as the ease may be, sub-clauje (b), of ;~0t'~ clause (i) oft~is proviso _ ,~; t :~,,::--~~ ;'$'$"  ;'/' surcharges on income-tax~ :,{i' the a~o~n~ of int!0me-~ computed in accordan~e with the pre-';~_ ceding provisions of this '~ph shall be i~ ~ by the aggre-lico gate  of surcharges for purposes of the union calculated a5 specified her8lhlder: -(4) where--(i) in· the case of an individual or a hindu undivided family, the amount of unearned income, not being income by way of interest on any security of the central or state gov-5 ernment or income received in respect of units from the unit trust of india, established under the unit trust of india act, 1963, included in the total income, or (ji) in any other case, the amount of unearned income included in the total income, 10 exceeds rs 15,000, a surcharge calculated on the difference between the amount of income-tax computed in respect of the income referred to in subclause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the amount of income-tax computed in j 5 respect of an income of rs 15,000 if it had been the total income, at the following rate, nlmely:-(1) whe~e the amouj;lt of the difference does not exceed rs 14,500  20 per cent of the amount of such difference; 20 rs 2,900 plus 25 per cent of the amount by which the difference' aforesaid exceeds rs 14,500; (2) where the amount of the difference exceeds rs 14,500 (b) where-(i) in the ca~~ of an individual or a hindu undivided 25 family, the eaxved income and income by way of interest on any security of: the central or state government and income received in respect of units from the unit trust of india, e~tal>hsh~d under the unit trust of india act, 1963, included in the total income, or 30 (ii) in any other case, the earned income included in the total income, excecl!s rs 1 lakh, a !ui'charge calculated on the amount of the difference between the inco}lle-tax coillpnted in, res~ect qf tl1~ inc,orne referred t9 in sub- 35 clause (i) or, as, the case may b~, ,sub-claus~ (ii) , if such income had been ute total incom~ and the income-tax corpputect in respect of a total income of rs 1 lakh, at the following rate, n~ely':-5 per cent of the amount of :mch di1fen!nce; 40 rs 3,250 plus 10 per cent of the amount blr wlliqq the dl1!erence afo~~ ex~ ~ ~,,ooq; - 0 (1) where the amount of the di1ference does not exceed rs 65,000 (2) where the amount of the ~ence ex~ its  85,,000 lm,t ~qej ~t exc;eed rs  1,30,000  (b) a special surcharge calculated at the rate of ten per cent on the aggregate of the following amounts, namely:-(i) the amount of income-tax computed at the rate hereinbefore specified; and  (ii) the amount of the surcharge calculated in accordance with clause (a) of this sub-paragraph  paragraph cin the case of every registered firm,- rates of income-taxnil; (1) where the total income aoes not exceed rs 25,000 6 per cent of the amount by which the total income exceeds rs 25,000; (2) where the total income exceeds rs 25,000 but does not exceed rs 50,000 (3) where the total income exceeds rs 50000 but does nr;t exceed rs 1,00,000 rs 1,300 pltt! 8 per cent of the amount by which the total income exceeds rs 50,000; (4) where the total income exceeds rs 1,00,000 rs 5,500 plus 12 per cent of the amount by which the total income exceeds rs 100000  surcharges on income-taxthe amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for purposes of the union calculated as specified hereunder:-(a) in the case of a registered firm whose total income' includes income derived from a profession carried on by it and the  income so included is not less than fifty-one per cent of such total income, a surcharge calculated at the rate of ten per cent of the amount of income-tax computed at the rate hereinbefore specified; (b) _ in the case of any other registered firm, a surcharge: calculated at the rate of twenty per cent of the amount of income-tax computed at the rate hereinbefore specified; and (c) a special surcharge calculated at the rate of ten per -j cent on the aggregate of the following amounts, namely:-(i) the amount of income-tax computed at the rate ~ hereinbefore specified; and  (ii) the amount of the surcharge calculated in accord-~ce with clause (a), or, as the case may be, clause (b) of) this sub-paragrph ' paragraph d ease of every local authority,-rate of income-tax , the whole of the total income 45 per cent surcharges on income-tax  amount of income-tax computed at the rate hereinbefore w!u1ec1 shall be increased by the aggregate of surcharges for pur· of the union calculated as specified hereunder:-(a) a surcharge calculated at the rate of ten per cent of the amount of income-tax computed at the rate hereinbefore speci-~  ~, and  "  1 ·;::~ui:} (b) a special surcharge calculated at the rate of ten per on the aggregate of the following amounts, namely:-(i) the amount of income-tax computed at the rate hereinbefore specified; and (ii) the amount of the surcharge calculated in accordance with clause (a) of this sub-paragraph  paragraph ethe case of the life insurance corporation of india established the life insurance corporation act, 1956,- rates of income-tax52  5 per cent; ~on that part of its total income _"""n consists of profits and gains life insurance business it any, of the the rate of income-tax applicable in accordance with paragraph f of this part to the telal income of a domestic company which is a company in which the public are substantially interestf"d  paragraph fthe case of a company, other than the life insurance corpora-:~ of india established under the life insurance corporation act,  rate~ of income-tax in the case of a domestic company- (a) (1) where the company is a company in which the public are substantially intere;led,-(i) in a case where the 45 per cent of the tqtal ineome; total income doee not exceed ri 25,000 total income exceeds  a company in which the public are substantially interested,-' (i) in the case of an in-, dustrial ('ompany-(l) on so much of the 55 per t cen ; total income as does not ex~eed rs 10,00,000 (2) on the balance, if 65 per cent; any, of the total income (ii) in any other case 65 per cent of the total income; and (b) in addition, where the company is-(i) a company in which the public are substantially interested, or (ii) a company as is referred to in clause (iii) of subsection (2) or cl::use (a) or clause (b) of subsection (4) of section 104 of ~he income-tax act, or (iii) such a company as is exempt from the operation of section 104 of the said act by a notification issued under the provisions of sub-section (3) of that section,-| qn           | so much of    | the       ||--------------|---------------|-----------|| come as does |               |           || not          | exceed the    |           || relevant     |               |           || amount       | of distribu-  |           || tions        | of            | dividends || b,v          |               |           || the          |               |           || company      |               |           |provided that the income-tax payable by a domestic company, being a company in which the public are substantially interested, the total income of which exceeds rs 25,000, shall not exceed the aggre- 45 gate of-(a) the income-tax which would have been payable by the company if its total income had been rs 25,000 (the income of rs 25,000 for this purpose being computed as if such income included income from various sources in the same proportion as 50 th~ tota~ income of the company); and (b) 80 per cent of the amount by which its· total income ~'iii!aijofj 1--in clause (b), theexpressi9n "the relevant dt8tributions of dividends" means the aggregate of the amounts, namely:-- (a) the amount of dividends, other than dividends on pre-'r shares, declared or distributed by the company during revious year relevant to the assessment year commencing ~e 1st day of april, 1964, or the 1st day of april, 1965, with reference to which the amount of the rebate arrived at under the ,:<trst proviso to paragraph d of part ii of the first schedu~e to ': '  the finance act, 1964 or, as the case may be, the first proviso to '  ·::;~;~'~~\'paragraph f of part i of the first schedule to the finance act, :{:~~~~"nb\'1965 is required to be reduced under the second proviso to the '"y,:,,'pid paragraph d or, as the case may bel the second proviso to :',;-;};:~ the said paragraph f, as diminished by so much of the amount m~:~~,of dividends aforesaid with reference to which the rebate 1  ';y~;)~;~·:~r!,ed to hereinabove  is reduced under the second proviso to ::;';ti':~(w,the said paragraph d or the second proviso to the said para-~  :}}  ~ ";m-s:lph f; and :_ "~,~"', i d a-:~~a~l;::': (b) so much of the amount of the dividends, other than ~~'l:;'~~; dividends on preference shares, declared ot distributed by the j}~~; ~orhpany during the previous year as exceeds ten per cent of its r:-~~l paid-up equity share capital as on the 1st day of the previous '""" ''',)1/' yj  ' ~,~i;;- \~,~ ' j ecu  ;'i,:<expzanation 2-for the purposes of clause (b), where a part of <fthe income of a company is not included in its total income because tlt1ls ,~tjcultural income, the amount declared or distributed as ', ,~'f·l·l ",/~ylaends (other than dividends on preference shares) shall be :;)':deemed to be such proportion thereof as the sum specified in 'clause ;"'{(~} bears to the sum specified in clause (b), such sums being+-,~, )-!  ' - :0\ (a) the average amount of the total income of the company ; ,':s;,'";;, "~~,,v of the five previous years in which it has been in receipt of tax- , able income immediately preceding the relevant previous year; and (b) the average amount of the total profits and gains (ex-s eluding capital receipts) of the company of the five previou~ ,i years referred to in clause (a) reduced by such allowances as , , may be admissible under the income-tax act but which have i"" dot been taken into account by the company in its profit and "; :':'d1 loss accounts for the said five previous years ) explanation 3-for the removal of doubts, it is hereby declared  fhit where any dividends were declared by the cofupany before the conunencement of the previous year and are distributed by it during that year, the amount of such dividends shall not be inductect in the amount, of dividends referred to in clause (q) of explanation 1 - ii in the case of a company other than a domestic company:- (i) on so much of the total income as consists of-(a) royalties received from an indian floocern in pursuance of an agreement made by it with the indian concern after the 31st day of march 1901 or (b) fees for rendering technical services rereived from an indian concern in pursuance of an agreement made by it with the indian concern after the 29th day of february, 1964 either case, been approved by the central government (li) on the balance, if any of the tota 1 income  part itrates for deduction of tax at source in certain cases in every case in which under the provisions of sections 193 to 195 of the income-tax act, tax is to be deducted at the rates in force, deduction shall be made from the income subject to deduction, at the following rates:-_---------- --------30 i i income-tax rateo! rate of income-tax surcharge 18 per cent 4 per, cent; 351 1 in the case of a person other than - company-(a) where the person is resident, on the whole income (excluding interest payable on a tax free security)  (b) where the person is not resident in india-(i) on the whole income (excluding interest payable on a tax free security) | income-tax    | at    ||---------------|-------|| 25            |       || per           | cent || and           |       || surcharge     | at    || 8             |       || per           |       || cent         |       || of            | the   || amount        | of    || or            |       || income-tax    | and   || 4s            |      || come-tax      |       || in            |       || respect       | of    || the           |       || in-           |       || come          |       || at            | the   || rates         |       || prescribed    | in    || paragraph     | a     || this          |       || schedule,     |       || if            |       || such income   | had   || been          |       || the           |       || total         |       || income,       |       || 50            |       || whichever     |       || is            |       || higher;       |       || 12·5          |       || per           |       || cent         |       || 4             |       || per           |       || cenl          |       |(i0 on the income by way of interest payable on a tax  ,;;:  i free security rate of income-tax &ate of lu1'cllarie 22 per cent nil ····where the company is not a  c1cjim8tic company-15 per cent nil 25 per cent nil 'i~'~~i:iiio:;l:· (0 on the income by way of dividends payable by an indian company as is referred to in the proviso to section 85a of the income-tax act (h) on the income by way of dividends payable by any domestic company other ! ",;-  50 per cent nil ,r; than a company referred to '   in (i) hereinabove :)' uio on the income by way of  royalties payable by an in- ; i' dian concern in pursuance of i~'i0~' :thagr~~e~di~dec::~ ,~~",;wty· after the 31st day of march ·~:~~;r·' 1961, and which has been j;!;:~: approved by the central ;," government >"':';';'" ~)1r; (iv) on the income by way of 50 per cent nil ~tr~; \1 ~ct!:::t;::e r~~d::lng ~~ ,), nieal services in pursuance ·s· '~:':  of an agreement made by it ~ with the indian concern nil 44 per cent '~;~i' i ~~ ~~6~th ~~y ;fn~eb~~ ':!!i·· been approved by the central government (11) on the income by way of interest payable on a tax free security (vi) on any other income nil '10 per cent  (see section 3) rates of annuity deposits| nil                            | 5        ||---------------------------------|----------|| ti)                             |          || in                              | the      || whose total income does not ex- |          || ceed rs                        |          || 15,000                          |          || 5                               |          || pet                             | cent of || total ihcome: '                 |          || 10                              |          || (ii)                            |          || in                              | the      || whose total incomfi             | exceeds  || rs                             |          || 15,000                          |          || but                             | does     || rs                             |          || 20,000                          |          |provided that the annuity deposit to be made shall in no case exceed half the amount by which the total income exceeds rs 15,000 7l per cent of the adjusted total income: (iii) in the case of a depositor whose total income exceeds rs 20,000 but does not exceed rs 40,000 provided that the annuity deposit to be made shall in no case exceed the aggregate of the following sums, namely:-(a) an amount calculated at five per cent on so much of the adjusted total income as does not exceed rs 20,000; 20 ex-(b) one-half of the amount by which the total inc!ome ceeds rs 20,000 10 per cent of the adjusted total income: (iv) in the case of a depositor whose total income exceeds rs 40,000 but does not exceed rs 70,000 provided that the annuity deposit to be made shall in no case 25 exceed the aggregate of the following sums, namely:-(a) an amount calculated at seven and a half per cent on so much of the adjusted total income as does not exceed rs 40,000; (b) one-half of the amount by which the total income ex- 30 ceeds rs 40,000 - (v) in the case of a depositor whose total income exceeds rs 70,000 12i per cent of the adjusted total income: ~1p1(llea that the annuity deposit to be macfe shall in no case the aggregate of the following sums, namely:-(a) an amount calculated at ten per cent on so much of the ~djusted total income as does not exceed rs 70,000; , " ~;"!' :""~'~'~: (b) one-half of the amount by which the total income exceeds rs 70,000 ~!jii!iilj'i ',, ',/'1';1' , j" ~-,"~~"'',~,\ ' ,:'>''1;'" explanation-in this schedule "total income" means total in-'eorne computed in the manner laid down in the income-tax act with-, out making any allowance under section 2800 uf that act , r  sra'tement of objects ann reasons·the object of this bill is to give effect to the financial proposals  of the cent ral government for the financial year 1966-67 and to provide for certa·in connected matters opportunity has been taken to simplify and rationalise the provisions of the income-tax act and other enactments with respect to direct taxes the notes on clauses explain the various provisions contained in the bill  new delhi; sachindra chaudhurl the 28th february, 1966  j  president's recommendation under articles 117 and 274 of the constitiition of india --[copy of letter no f 3 (14)-bj66, dated the 28th february, 1966 from shri sachindra chaudhuri, minister of finance to the secretary, lok sabha] _ the president having been informed of the subject matter of the  proposed bill, recommends under article 117(1) and (3) read with article 274 (1) of the constitution of india, the introduction of the finance bill, 1966 to the lok sabha and also recommends to the lok sabha the consideration of the bill 2 prescribes the rates of income-tax and, in the case of uifift'lim'8te assessees, the rates of surcharges on income-tax, for lilj_essipe,nt year 1966-67 in respect of income other than capital it also prescribes the rates at which income-tax and sur-}~ila  q~ on income-tax are to be deducted at source from interest on dividends and other income during the financial year ~""51~}jid the rate schedules of income-tax for individuals, hindu ':,::i,~vided families, unregistered firms and associations of persons, ,;'i~~ eo-operative societies and registered firms, the income slabs and ~:ci':'5~"rates of income-tax are the same' as in the corresponding rate :",)\)}'jeheduies in the finance act, 1965 in the case of local authorities ',';r:,,~~ the'rate of income-tax is the same as prescribed in the said act ',' ",  ;<11f~t::'·f! "'i';:,:~! the existing limits of total income not chargeable to income-tax , :t'have, however, been increased, from rs 6,000 to rs 6,500, in the case ,of hindu undivided families satisfying certain conditions, and ,{'~trom rs 3,000 to rs 3,500 in the case of others further, in the case of '<}:~::~ident individuals and hindu undivided families, the amount of ",~"tax relief (which is calculated at the rate of 5 per cent on certain - '>~~ - , - ,:,:'\:~ounts of personal allowances) has been increased by rs ~5 in ::each case', as compared to the tax relief available under the finance "';,{:,'act, 1965 '~,~t:' : , the rates of surcharges on the tax on earned and unearned in-",:','~'t'eomes, as well as the surcharges on the tax payable by registered ,t;;~';1iftrms and local authorities, are the same as in the finance act, 1965 ),,:~"~~,gowever, the bill provides for the levy of a special surcharqe for ,:";" purposes of the union at the rate of 10 per cent of the aggregate amount of the income-tax and the above-mentioned surcharges, "  in the case of the life insurance corporation of india, the rate ,of income-tax on its profits and gains from life insurance business ",has been increased by 5 per cent, ie from 47·5 per cent under thp "finance act, 1965, to 52·~ per cent the rate of income-tax appli cable to the other income of the life insurance' corporation of india will be the same as the rate of income-tax applicable to the total ~come of a domestic company in which the public are substantially mte'rested in the case of companies, the rate schedule and the tax mechanics have been completely recast and simplified under the finance act, 1965 the effective rate of income-tax was arrived at by first calculating the tax on the total income of the company at the gross rate of 80 per cent then computing the amount of rebates of incometax admissible to the company at various rates applicable to different classes of companies and to different kinds of income included in the total income, and thereafter, in the case of certain domestic companies by reducin{! the amount of the rebate so computed by the sum calculated at the specified rates on the amount of bonus issue$ of the company or the amount of dividends declared or distributed by it on its equity capital, and finally by deducting the net amount of rebate so arrived at from the amount of gross tax calculated in the first instance unde~ the' proposed rate schedule, the actual ~ates of income-tax in the case of various clas~es ot companies have been set out directly without any provision for rebates or reduction in rebate the rates of income-tax for various classes of· companie~ have, however, been increased by 5 per cent of the total income, in each case, over the correspondin~ rates in force fol' the assessment year 1965-66, except in the case of domestic companies in which the public are ~ubstantianv interested with total income not exceedin~ rs 25000 in the case of the last-mentioned clas! ofcompan1e~ the rate of income-tax has been increased from 42·5 per cent under the finance act 1965 by 2'5 per cent to 45 per cent the rate of incometax on royalties and technical service fees received by forei~ companies under certain approved aweements~ however remain~ unchan~ed at qo per cent in the case of domestic comoanje~ (ie, indian companies and foreign companies which have made the presrribed arrangements for declaration and payment of dividends within india) other than companies whicn are required under s~ction 104 of the income-tax act to distribute a s~ifled percenta~e (>f their distributable income bv wav of dividends, it is proposed to levy income-tax at th~ existing rate of: 7·5 per cent of the- amount of equity dividends declared or distributed during th~ previous year onlv on that portion of the distribution which exceeds 10 per cent of the paid-up equity capital as on the first day of the previous year under the financ'e act 1965 guch tax was leviable on the whole of the equitv dividend  npclared or distributed durin!! th p previo1:1s :year, except in the case of a company which had declared its malden divide~d during the relevant previous year or anyone of, the four immediately preceding previous years the bill does not make any provision for the levy of an extra amo11nt of tax on companies wi reference to the amount of bonus dr' the amount of al'\y bonus i$slled by them to their equity during the pre'vious year   ;provisions of the fin~ce act, 1965, w~ereunder ~ertain 'alellle companies were entitled to a rebate of mcome-ul?' in res-••  of their 'profits and gains attributable to the business of gener-",:  , or distribution of electricity or any other form of power or of ~::;,\t~~ction, manufact~re or production of ally one or more o~ the ~~;jt;,  fted article~ or thmgs, have been replaced by a new provjslon }>§"'~poaed to be mtroducedld the income-tal' act by clause 15 of the "~:bfll,' for 8 straight deduction of 8 per cent of the amount of such :',~~ts and gains in computing the total income :~";:f"i, ~'l'hebasis and quantum of tax rebates in relation to exports for ' ,:~;l!ae 'assessment year 1966-67 are the same as for the assessment year ·":,,ua (}i)~~u     ;'ifi~~czatlse 3 prescribes the rates at which annui~y de~osits in respect '"':;'i;;l~~,e ass,essment year ~96~-67 an~ adv~nce annuity depo~lts f~r the $~cial year 1966-67 will be required to be made by mdivlduals,  :','r~1'                                                                                                                                                                                     - '                                                                                                                                                                                                                                                                                      '<~1nndu undivided families, unregistered firms, associations of per-:',,'k, t~}t;:fons, etc, under the provisions of chapter xxiia of the income-tax ;(::~~~~ these rq~s are the s<!m~ as under the finance act, 1965 f~~'tlclause 4 (a) seeks to amend clause (18) of section 2 of the income-,'        ,;,~,-:-<{:<:iu act the amendment sought to be made by su,b-dause  (a) (0 "~'1¥ia~purely of a drafting nature under the amendment seught to be  ?~·f         - ·,,~~deby sub-clause (a)(u), the cond~tions specified in section ~18)(b) :'i';~ ,:the income-tax act for qualifymg as a company in whlch the ie:~~ublic are substantially                                    inte~ted will be relaxed in the case of ;"{~ jndia,z:l compmy who~e business consists mainlu in the construc-:1" ~n of ships or in the ml!nuhcture or process\ng of goods or in mining i'~~jjp,tb~ gen~:ratiol) or di$tribution ot e1egtricity; or any other form of -~                                                                             ':~~;"1er: h\therto, -this relaxation ,:",as allow                                                 ed 0111y in the c:~se of an  ~  , an· cqplpany wholly ~ngagedinmanufacture or proc~ing, of \':ipp~ ox' ip milling or in the generation or distribution of electricity "'-:~p any other form of power -  {~(·clau$e 4(b') seeks to amend clause (22) of section 2 of the income-"tu-,act this amendment is· co:t\sequ~ntial to the rlllendment pro-josm to be made in section 45 of the ipcome·tax ad by clause 13 of ~ bill--;  ''"" ~~ <: ~~' clause 4 (c) seek~ to amend clause (42a) of section \2 'of the 1'n:ome-tax act the effect of the' amendmen~ will be t~at capital  ' gains arising from the transfer of a bank certificate ob'tained by a ,·person from an authorised dealer in foreign exchange in evidence of , ~ttarice of money to india from abroad in aceordance witb' the foreign exchange regulation act, 1947, or the rules made thereunder during the period from the 26th october, 1965 to the 28th february, 1966 (or such extended period as may be notified by the central government) will, in no circumstarlces, be treated as capita] gains arising from the transfer of a short-term capital asset such capital gains will be chargeable to tax in the same manner as capital gains arising from the transfer of a long-term capital asset clause 5 seeks t~ substitute for existing sub-clause (ii) of clause (b) of section 13 of the income-tax act a new sub-clause the effect of the proposed new sub-clause is to 'widen a little the scope of the present sub-clause (ii) so that the income of a trust for charitable purposes or a charitable institution wiulose the benefit of exemption from income-tax provided under section 11 of the act if any part of its income or any of its property enures or is during the previous year used or applied directly or indirectly for the benefit of the author or founder of the trust or the institution or any person who has made a substantial contribution to such trust or institution or any relative of such author, founder or person  clause 6 seeks to amend section 32 of the income-tax actthe effect of the amendment proposed to be made by sub-clause (a) will be that in respect of any machinery or plant, the actual cost whereof does not exceed rs 750, acquired by the assessee for the purposes of the business or profession, the full amount of the actual cost of such machinery or plant would be allowed as a deduction by way of depreciation in the year in which such machinery or plant is acquired the amendment proposed to be made by sub-clause (b) is consequential to the amendment sought to be made in section 43 of the income-tax act by clause 12 of the bill the effect of this amendment will be tha where, for the purposes of allowing a deduction by way of depreciation, the excess of the actual cost, of a motor car over rs 25,000 is ignored in accordance with the proviso to clause (1) of section 43 of the income-tax act (proposed to be inserted by clause 12 of the bill), then, in computing the amount of the terininal charge or terminal allowance on the sale, discard, etc, of such motor car, the "moneys payable" in respect thereof shall be taken to be such proportion of the sale proceeds, compensation, etc, as the amount of rs 25,000 bears to the actual cost of the motor car as computed before applying' the said proviso to clause (1) of section 43 the' etrect of the amendment proposed to be made by sub-elause '(e) win- be' that 'in computing the profits and gain! of a busflless the assessee, a deduction by way of initial depreciation in respect of buildings newly erected by the which are used as residence or as a hospital, etc  by his employees whose income chargeable ~gt'~"~'ib: ehead "salaries" is rs 7,500 or less at present, this allow- triade only in respect of residential houses or hospital,' creche, ~~;; ,-etc, erected for the use of ~mploye88 drawing 8 ~di_~tjlon not exceeding rs 200 per mensem ),"r!f4tith', seeks to amend the explanatioft to wb-section (3) of ~cm ss of the income-tax act the effect of the amendment will "l~t~e benefit of the, continuance of entitlement to d~v,elopment '~te in respect of machinery or plant installed by a subsldiary com-~~,the hands of its holding company, under sub-section (3) of ~~~q on  ,j3 will be availa~ie (subject to thefulfilmen~ of the other ~tlqna specified in this behalf) where the subsidiary company ~~~:~;wbolly owned subsidiar:, is merged in its hol~g company, ;,rteapective of whether the subsidlary company is an indian company  "  -'" -,  -,  :  +,1 ~~t ; t~bi4~'e'8 seeks to amend section ~3a (1f the income-tax act, rl!lat-1il"loaeduction by way of development allowance at specified per-::-rm'tages of the actual cost of planting of tea bushe- :,::~:~~ , ""1-~~' i:'~ , '~,!j ,,ipub-clause (a) (i) seeks to increase the development allow-jmce ,for planting of tea bushes in new arlwl from the existing :{i,!'qwmtum of 40 per cent to 50 per cent of the actual cost f ,::\,p~pting :;,;:,~:vi sub-clause (a) (ii) seeks to increase the quantum of the :",taevelopment ahowance for replanting teabushe! in areas already <','!under plantation from' the existing quantum of ~ per eent ts '/~r:~o' !per' cent of the actual cost of planting sub-clause (a) (iii) seeks to make a provision for the deduc-xl'iltion of the development allowance in two stages, in·replacement i :)"of the existing provision under which such deduction is allowed ~,') in the fourth accounting year reckoned from the accounting year 'i-,;in which the land is prepared for planting or replanting, as the ,)~ ~se may be under the proposed provision, development allow-'irl,julce will, in the first instance, be computed with reference te hi,ithat portion of the actual cost of planting which is incurred in :y,,{ -the accounting year in which the land is prepared for plantin~ or replanting, as the case may be, and in the accounting year " ~ext following, and the amount so computed will be allowed ~ ;;,l deduction in respect of such accounting year next fonowin~ the' cfliei6pmerif all<>warice will again be computed at the end oc file four-year ~'rim with ren!rence to the actual cost of plantmi,' ana if the' auoalice so computed exc~s the allowance alteady deducted in respect of the second year, as stated above, the sriiourif of- the' excess will be ahowed as a deduction in respect of tlie fourth' accounting year reckoned from the year in which 'tft~ ltititi ~'prepared for planting or replanting, as the case may be ' sub--elnme (b) seeks to make two consequential amendments: by iub-see1:fon (2) of ~@ction 33a ciause, 9> $eeks iff amend section 34 of the income-fax' act th~ effect or flilir anu!ndih~rit wiii be that in regpect of a 'sliip acqtiited lsy flleissessee after thif 2gth february, 1966, the quantum of develop; merit reoate r~serve required to be created by hiiri lmder the' pro-visions of s'eclf6n ~f(3) (a) of the income-tax act wul be reduced ftom75"per cent' of tne amount of development rebate actli'ally al1owea, to 50 per cent thereof clause 10 seeks to insert a new section 35a in the income-tax act sttb--section- ('l} of the proposed section 35a seeks' to provide that any' ~a1!)ital- expenmmre incurred" by an' asses'lee after the 28th february, 1966 on the acquisition of patent rights or copyi'igiits '(hereinafter referred to as rights) used for the pur-po~ of the' business: win' be allowed as a deducflon in equal insfalmenfs' over a period of 14 years or 14 years as reduced ·by the number of complete years comprised in the period which has e~ired since th"e commencement of the said' rights and before tbeir aequisitiotl by the assessee whichever of the two periods is shorter;' where a' full period ('if 14 years had expired before such acquisition, the entire cost of acquisition will be ahowed in one instalment sub-$ictim&· (2) provides that wl1~(!' l)efore the' end of any otthe relevant previous' years for' which tr€ allowance' is to be made the tights come to an' end without m!lng subsequently revived or where'the wessee' sells fhe~ whol~ or any part of tne rights for an amount which i!i not b!ss" thin th~ capital eost remaining unatiowed, n6 al1~wance umler su~-~etit)n (1) will be granted in resp~t of tlie ptlev;ous yeiir ijf vthi~h·tbe rights come to an end or, as tne ca~ may be, ,are' fold :,'  st&i);~~cr~  (3), pi"ovides that where the rights come to rn ,·:'iii,wl~oul~8 '~~uentlj revived or are sold' in tbe~ j ~,_'v and the proceeds of the sale ate less than the cost of thereof remaining unallowed~ then the cost, so re-:jdllljdlilt; unallowed or, as the case may be, such cost as reduced ~~~'iiiv' the sale proceeds, will be allowed as a deduction in, full in '~k(ii!;ntjta' previous year in which the rights come to an end or, as the' 'may be, are sold ,,sub-section (4) provides ~hat where the rights or any pari ~:::i,iijii~!oi are sold and the capital sum received on the sale exceeds ~;!;'~':uliv cost of the rights remaining unallowed, the excess, to the ~~_:wlt of the amount already allowed, will be charged as the profits of the previous year in which the rights are -,f"  , sub-section (5) provides that where only a part of the rights sold for an amount which is less than the capital cost remain-, unallowed the amount of the allowance to be made und~r (1) in respect of the previous year in which such takes place and subsequent previous years will be recomput- the recomputation will be made by reducing the capital remaining unallowed by the sale proceeds, and the balance be allowed in equal instalments for the relevant previous and subsequent previous years 11 seeks to amend section 36 of the income-tax act the :of this amendment will be that in the case of an approved l~cial corporation engaged in providing long-term finance for ~tlstrial development in india, whose paid-up share capital doe!' 19~rtxeeed rs 3 crores, the limit up to which a dedllction is allowed ~mputing its total income in respect of the amount carried' by l\:~orporation to a special reserve account, will be increased from ~~existing quantum of 10 per cent of the total income to 25 per :~tt thereof  --'i t"""', ~~ ::" clause 12 seeks to amend clause (1) of section 43 of the income-~,act the effect of the proposed amendment will be that in ~ect of any motor car acquired by an assessee after the 28th i"ebruary, 1966 for more than rs 25~ooo, no depredation allowance rill'· be admissible on the cost in excess of such amount, in computing he profits and gains of any business or profession ::- tlause 13 seeks to omit sub-sections (2) to (4) of section 45 of lj~, ,income-tax act relating to the charge of tax on capital gains 'epfesented by the fair market value of bonus shares allotted to an' ~uitl shareholder pf a company, in certain circumst~nce5 claw, 14 seeks to amend section 55 of the income-tax act the amendment is consequential to the amendment of section 45 of the income-tax act by clause 13 of the bill clawe 15 (b) seeks to amend section 80a of the income-tax act the effect of" this amendment will be that a contract for a deferred anduity on the life of the assessee or on the life of the wife or husbarid of the assessee which contains a provision for the exercise, by the insured, of a cash option in lieu of an annuity will also be regarded as a contract for a deferred annuity on the life of the assessee, etc, for the purposes of section 80a ¢za!l!e 15 (c) s~ks to introduce a new section 80e in the incometax act the effect of the proposed new section will be that in computing the total income of an indian company or any other company , ' which has made t~ prescribed arrangements for the declaration and payment of dividends within india! a deduction will be allowed of a lum equal to eight per cent of the amount of profits and gains attributable to the business of generation or distribution of electricity   or any other form of power or of constructiotj, manufacture or production of anyone or more of the articles or things specified in the list in the fifth schedule included in its total income as computed under the other provisions of the income-tax act this deduction is not available in the case of a company in which the public are sub-itantially interested and whose total income (as computed without applying the provisions of this section) does not exct'ed rs 25,000, the rate of income-tax in the case of such companies being 45 per cent as against the rate of 55 per cent applicable in ' the case of other companies the deduction under this lectiod is in replacement of the rebate of tax allowed to such companies in respect of their profits and gains from the aforesaid activiti~ under the provisions of the finance act, 1965 clause 16 seeks to amend section 85a of the income-tax act the amendment proposed to 'be made by sub-clause (a) (£) is of a vlerbal nature the amendments proposed to be made by sub-clause (a) (ii) and sub-clause (b) are consequ,ential to the amendments proposed to be made by clause 43 of the bill clause 17 seeks to insert two new s!ections, 85 band 85 c in the ineome-tax act i section 85b is in~nded to secure that income by way of dividends received by an indian company from a foreign company which has n~;\ ~~~, ;the pr~~crtbeq a~anbemen~ for declprpti(m ~d payment ' ~_}:~ : ! ,:~:  ',,'  ,- ':{ f  __  h ':j' -  : ~ • in india, on shares in the foreign company allotted to it of the supply of technical "know-how" or technical  '  the foreign company in pursuance of an agreement :bv the central goveriilllent in this behalf before the 1st 'ihe relevant assessment year, will bear income-tax at th~ per cent only section 85c seeks to provide that income by way of commission, fees or similar payment received by an indiall from a foreign company which has not made the prescribed rements for declaration and payment of dividends in india, in on of the supply of technical "know-how" or technical iterthe foreign company in pursuance of an agreement approved central government in this behalf before the 1st october of assessment year, will bear income-tax at the rate of 25 ~'_'r'il"':'&u only 18 seeks to amend section 86a of the income-tax act th ~;>':'~''~"''~'o,  6·-f·  this ~mendment will be that the limit up to which rebate of "~~lcome-tax can be allowed in respect of income from interest on ',~ties issued income-tax free by the central government or by ~':~nystate government on which income-tax is payable by the state  tj()",ernment, will be raised from the existing quantum of 25 per cent "(if:'$uch income to 27·5 per cent thereof this a'mendment is conse- :~~~ntial to t~ proposed levy of a special surcharge at 10 per cent of '  the tax and surcharge payable by non-corporate assessees and the ··':pft,posed increase in the rates of income-tax applicable to various  ,classes of companies , ~:~r~;,'~ " - clause 19 seeks to amend section 88 of the income-tax act the j~ect of this amendment will be that the limit up to which rebate of ~;zi~come-t3x can be allowed in respect of donations made by a com-:ilpany to the national defence fund, the jawaharlal nehru memorial '/:~fund, charitable institutions, etc" will be raised from the existine (~1qtjantum of 25 per cent of such donations to 27·5 per cent thereof :~is amendment is consequential to the proposed increase in the <itates of income-tax applicable to various classes of companies , ~: ~ j ~, /' i clause 20 seeks to amend sectiur 104 of the income-tax act  ;f:: , sub-clause (a) -the amendments proposed to be made by this sub-clause are consequential to the amendments propos~d to be made by clause 21 of the bill in iection 109 of the income-tax act suh-claust! (b)-the effect of the am,endment proposed to he made by sub-clause(b) (i) ~ill be that the ~emption from the - j jt'equ!rement of compulsory distribution of dividends up to the 'statutory percentage available, intet alia, to indian companies wholly or mainly engaged in manufacturing activities, etc, will be extended to indian companies mainly engaged in the business of construction of ships the omission of the words "wholly'or" occurringin the existing section 104 (4) (a) is in the nature of a verbal amendment sub-clause (b) (ii) seeks to insert a ,new sub-clause (c) in section 104 (4) of the income-tax act to  provide that the requirement of compulsory distribution of divi· dends up to the statutory percentage will not apply in the 'case of " ' a company which is neither an indian company nor a company which has made the prescribed arrangements for the declaration and 'payment of dividends within india the amendment proposed to be made by sub-clause (b) (iii) is consequential to the amendment proposed to be made by sub-clause (b) (i) of this clause clause 21 seeks to amend section 109 of the income-tax act sub-clause (a) seeks to introduce two new sub-clauses, namely, sub-clause (g) and sub-clause (h) in clause (i) of that section the effect of the new sub-clause (g) will b~ to secure 'tliat the "distr:ibutable income", of a company will be computed by deducting from the total income, inter alia, any expenditure  actually incurred for the purposes of the business, but disallowed in computing the i~come chargeable under the head "profits and gains of business or profession", being a bonus or gratuity paid to an employee, legal charges, any such expenditure as is referred to in, section 40 (c) of the income-tax act and any expenditure claimed as a revenue expenditure but not allowed to be d~ducted , '" asr:such, and not resulting in the creation of an asset or enhance-lme~t in th~ value of an existing asset the effect· of the propbsed sub-clause (h) will be to similarly secure a deduction in respect of any expenditure wholly and exclusively incurred for the purpose of making or earning any income included in the total income (other than income chargeable under the head "profits and gains of business or profession") but disallowed in computfig -sueh income, and not resulting in the creation of an asset or i enhancement in the value of an existing asset ,  i sub-clause (b) seeks to substitute the definition of the term i '''investment company" to secure that a company will be re- 1 garded as an investment company if its total income consists ~~;"\')loahl)])f\o~income which, if it had been the income of an indivi-,n ·rpaj,rwq~~~ "prded u· uneamed:meome ~~-~"~~  ',: \: \  '~"':'(~~<~'_j it ", '" '_    8ubclause (c) -tbe amendment pr9poie9 w qe ~e by 5ub-clause is purely of a drafting n~turesub-clause (d) seeb toliiubstitute sub-clause (iii) (3) of ' eecti~n 109 of the income-tax act the effect of the proposed ,;' " ~e~dment will be that in the case of indian companies which 'are only partly (as distinct from mainly) engaged in manufac-<~\~(~'~~~ buing and other specified activities, the "statutory percentage" ':~'''''' ;}  ,i" of distributable income in relation to profits and gains attribut-, ~ tp such activities will be "nil", as a~a~t 45 per cent at te~t j i , ' ',: clause 22 seeks to amend section 112a of the income-tax act (:'o;·:fte effect of the amendment will be that the tax: concessioos avail-~t\:~ble under sections 1121\ and 193 of the income-tax act, in  respect ;;\\'d interest on national savings certificates (first issue), will also :~~1- available in respect ~f interest on national savings certificates ~'?~ri ,irst issue) -bank senes :  ' ro-' \ ' ~~ ~lause 23 seeks to amend secti()n 114 of t4~ mcojl1~~ax act the '~~t!'l'dment is consequential to the ~endment of section 45 of the c:\ • jjlcome-tax act by clause 13 of the blll :' ';'1~;t,;  :~;'::~~i,:)'fclause 24 seeks to arnend section 115 of the income-tax act the  i·::  l~~;:  · (endm  ents are consequential to the amen<:fment ~~ ~ec~ion ~5 of \-pe \;~,~ip~tta~ act by clause 13 of the bill ~~,)\ clause 25 seeks to amend section 193 of the income-tax act '·~f effect of this amendment will be that in the case of an individual ':''''''i',~'  -- ,':j'esident in india, holding central or state government ;~wities /<~·€other than national defence bonds, 1972, national 5;lvings certifi- "'ba~ (first issue), national defence loans, 1968 and lb72 and gqld ";':;&nds, in respect of which specific provi~ions alreadyex,ist] interest '~';i:~t~ be paid without deduction of tax at source,;if ,the ~pldei' oithe "hriecurities makes a declaration, in writing before the pen>qd responsi-,;;ble for paying the interest, that he has' not previously been ,~ to income-tax, that his total income in respect of the previous year to which the interest relates is not likely to exceed the maximwn  ~ount not chargeable to income-tax, and that the total nominal ~ue of such securities held by him or on his behalf did not exceed bs 2,500 at any time during the said period clause 26 seeks to amend section 201 of the inco~e,,:~acl sub-clause (a) seeks to amend the proviso to the abovementioned section under the existing proviso, a penalty under section 221 of the income-tax act can be levied on a person who ii responsible ~ deduct tax at source from aalary, etc,lorhil  faihlre to make such deduction or to pay the tax so deducted to the credit of the central government within the prescribed time, <!dlyif the income-tax officer is satisfied that such person h~d '' wilfully failed to deduct and pay the tax under the proviso as amended, penalty under section 221 of the income-tax act will be leviable on such a defaulter if the income-tax officer  ~ ~tisfie(f that there were no good and sufficient reasons for the failure to deduct and pay the tax ~ -~ sub-clame (b) seeks to make a new provision in section 201 f'or the charging of simple interest at six per cent per annum  j from _ persons who are responsible for deducting tax at source from salary, etc, and paying such tax to the credit of the cen- tral government within the prescribed period but have defaulted either in deducting the tax or in paying the tax deducted to the credit of the central government ttithin the prescribed time sub-czause tc) seeks to make an amendment in sub-section (2)~' the effect of which is that the simple interest· referred to in the proposed sub-section (la) will also be a charge on the assets of the person or company concerned   d· clause 27 seeks to amend section 235 of the income-tax act  the j!~f of this 'amendment will be that the limit up to which rebate of income-tax can be allowed to an assessee in respect of that portion of, the dividend received from a company which is attributable to' the;: company's agricultural income and on which agricultur~l inco:me-tax has been paid by the company to the state government, will be raised from the existing quantum of 25 per cent of such portion to 27'0 :per cent thereof this amendment is consequential' »the proposed levy of a special surcharge at 10 per cent of the tax aud surcharge payable by non-corporate assessees and the proposed increase· in the· rates of income-tax applicable to various classes of eompanies ' clause 28 seeks to amend section 236a of the income-tax act this amendment seeks to bring the relevant provision in section ~a in line with the provision in paragraph f of part i of the first schedule to the bill for levy of tax on certain companies with reference to the "relevant amount of distributions of dividends" by  sucp compenie   ; :cia~e 29 seeks to amend section 280a of the income-tax act 4 elfect()f- this amendment will be that a person  whose total in-,,c1ja,rgeable ; ,to ··:tax ·for,,:: the assessment year· 1967:-68 ~r any ,ssessment year is rs 25,000 or less will not be requir-8jly annuity deposit (or advance annuity deposit) in re-;,any such assessment year such a person is, however,  option to make a declaration that the provisions of chapter the income-tax act regarding annuity deposits should him, and if he does so, the said provisions shall apply to him to the assessment year 1d respect of which he makes the and all assessment years thereafter the declaration in _""wid any assessment year is required to be made not later than t~7i:~ulllft:september of the financial year immediately preceding that year ;~:j"  :" ; --::', ,: ;:/  ~:i'f<tiie 30 seeks to omit the explanation to section 2boe of the i/>'>~e--tax act this amendment is consequential to the shift~n£ 01 ~':;::,$l~zp14nation from section 280e to section 280a, by clause 29 of i"''·~ll11l'  ~,(}'~~;~;¥~;,'aau:,~ '31 seeks to substitute a new section for the existing section ::,:;;:i_ln uorder to make the provisions relating to rounding off of  ,~muity deposits more clear and simple and bring them in line with ;~~~orus of the proposed new section 288a , '~~i i :'&tlse 32 seeks to introduce a new sub-section (la) in section i,~x'6rthe income-tax act to enable an individual who has complet-'~tth~l~ge of ieventy years on the last day of the previous year rele-"iin'''!tb~llie assessment year, and who has not before that day exercised :b1e option under sub-section (1), to make a declaration that the pro-'~i8ns or chapter xxiia regarding annuity deposits should not \ r~piyi to' ;him in relation to any ass~ssment year in which he makes :;;'~e declaration and all assessment years thereafter   ; , ''if'';, ", ,'~~'llp1f!-'il$,e 33 seeks ~ amend explanation 2 to section 280zb of the " om~tax act this amendment seeks to bring the provisions of " &aid explanation in line with the provision in paragraph f of i;::~ mt'1 of the first schedul{' to the bill for charging income-tax on certain domestic companies with reference to the "relevant amount ,'i \ - 'jw~ distributions of dividends" by such companies ~,)t clause 34 seeks to insert two new sections in the income-tax act £namely, sections 288a and 288b ;'~nl;the proposed new section 288a seeks to provide that wher th~ "rttofal income as comouted in accordance with the provision!'l of the ;act is not a multiple of ~n rupees, it will be rounded off to the nearest multiple of ten rupees by ignoring the fraction which is less ithan five rupees and increasing the fraction which amounts to five rupees or more, to ten rupees; and the total income so roundedo! will be deemed to be the· total income where the total income of an assessee includes earned income, the adjustment on account of wunding off will be made to the earned income w~· there;is no eamed income, such adjustment will be made to the unearned income the proposed section 288b seeks to provide that -fraction,sof q~e rupee contained in the amount of tax (including adv~~ ~~p,~;x deducted at source), penalty, interest, etc, and refunds will berq~d­ed off to the nearest rupee, by ignoring amounts less ~n ,fifty j)9-i§e and increasing amounts of fifty paise or more, to on~rup~ clause· 35 seeks to amend, retrospectively, section·297 of tile income-tax act, 1961, to secure that the exemptions, reductionsidr~ or other modifications in respect of income-tax notified by the central government under section 60a of the· indian incom,e-tax act, 1922, w~ich were in force immediately before the couimence~eilt ~f the income-tax act, 1961 continue in force until rescinded by the centr~l government clause 36 seeks to amend the first schedule to the income-tax act the effect of this amendment will be that th~ quant~ of the rebate of income-tax to be allowed with reference toint-erest on  ,   -- l' - • - ft income-tax free securities of the central government m~~mpht~$ the tax payable' on income from life insurance busin~ w~ be r~e,d from 25 per cent to 27  5 per cent of the ann~ average r~ ~e amount o~ such interest this amendment is consequential to t~ proposed increase in the rate of income-tax applicable to iz1cojae from life insurance bu~ines~ clause 37 seeks to add "newsprint" in item (16) of, apd twonew items, namely, "tea" and "printing ma~nery" to, tl?-e ~t of arijcles or things in the fifth schedule· to the jncome-tax act tfle effect of this will be that new machinery or plant installed by ~ ruisessee during the period 1-4-1966 to 31-3-1970 in a business of manufacture of anyone or more of these articie& will also qu,alify f~r the allowance of development rebate at the rate ~ 35 per cent of the actual cos~ thereof in other respects, namely, that of cojllpu~~, for the assessment year 1966-67 the amount of the deduction provided tmder the new section boe proposed to be inserted in the income-tax act by clause 15 of the bill, and for the purpose of determining whether a compapy was mainly engaged in specified activities durina tqe previous year relevant to the assessment year 1966-67 under the ~~pw1u1ti9n to section 85a of that act, income from the ~ufactur,  tpe9q9c;lj~'qf! ~~ij,(ll,e~ propo~ ~ rbe added :by ,this  clause will t;':~~~',·:~, < • _, _:  '"  ~  1~:':li!  jitreated as profits and gains attributable to the activities speci4  :a; those sections 'j&u ;t~~"" cl4usfi 38 seeks to amend the estate duty act, 1953 ;;~ subclauses (a) to (e), respectively,' seek to increase the (: '-", ~ f)" period specified in sections 9, 10, 11, 12 and 22 for the inclusion ~)  in his estate of property gifted, settled or otherwise disposed of ~:' 'by the deceased during his lifetime, from one year to two years , the amendment in sulrclause (f) (i) is consequential to these  >" amendments the· amendment in sub-clause <f)( ii) seeks to insert, retrospectively, a new ~lause (mm) in sub-section (1) of section 33 sub-clause (g) seeks to make, retrospectively, a consequential amendment to clause (a) of section 34 (1) the combined effect of these two proposed amendments will be that the property b~lo~ging to a deceased person who wasa member of a pollce force (including a border security force) and was killed in action "in protecting the border will not be chargeable to estate duty and will also be excluded in determining the principal value of the property passing on his death  sub-clause (h) seeks to increase from one year to two years the period specified in section 46 (2) of the estate duty act, for the inclusion in his estate of money or money's worth paid or applied by the deceased towards the satisfaction or discharge of certain debts or encumbrances where but for such satisfaction or discharge the liability would not have been deductible in the computation of the net principal value of his estate , )  sub-clause (i) seeks to substitute the rate schedule of estate duty contained in part i of the second schedule to the act by a new rate schedule under the new rate ,schedule, rates of duty have been increased by 2 per cent, from 8 per cent to 10 per cent, in the slab of rs 1,00,001-rs 2,00,000, by 10 per cent, ie, from 15 per cent to 25 per cent, in the ~lab of rs: 3~5(),001-rs 5,00,000, and by 5 per cent, ie, from 25 per cent to 30 per cent, in the slab of rs 5,oo,ool-rs 10,00,000 clause 39 seeks to make transitional provisions to secure that in the case of persons dying after ~e 31st march, 1966, but before the 1st april, 1967, sections 9, 10, 11, 12, 22, 33 and 46 of the estate duty act, as proposed to be amended by clause 38, shall have effect as if the references therein to two years before· the death of the· deceased were references to the said two years- less so much thereof as fell before the 1st april, 1965 the effect of tqis will be tj1at in ~he,~ue of such penions, property comprised in any gift, settlement, etc~ •• de  before lst april, 1985 will not be included in the dutiable iitate by reason only of the fact that the gift, settlement, etc, was made within two years before the death of the deceased clauses 40 and 42 seek to repeal, respectively, the expenditure-tax act, 1957, and the super profits tax act, 1963 as, however, section 6 • f the general clauses act, 1897, will apply, all the provisions of that section will be attracted in relation to the repeal, and any investigation, legal proceeding or remedy available under the repealed acts lilfly be instituted, continued or enforced in relation to any right, privileie, obligation or liability acquired, accrued or incurred under, or any penalty, forfeiture or punishment incurred in respect of any offence committed against, the repealed enactments as if the present ~ill had not been passed  clause 41 seeks to amend the gift-tax act, 1958sub-claule (a) (i) seeks to insert a new clause (iia) in section 5 (1) of the gift-tax act, '1958, to secure that gift-tax will not be levied on gifts of foreign exchange by a non-resident to  a person resident in india, where the foreign exchange so gifted is remitted to india in accordance with the foreign exchange regulation act, 1947 and the rules made thereunder during the period from the 26th october, 1965 to the 28th february, 1966 or such extended' period as rna, be notified by the cent!al government sub-clause (a) (ii) seeks to amend sub-section (2) of 'section 5 of the gift-tax act the effect of this amendment will be that the limit up to which the value of gifts made by any person during the previous year is exempt from gift-tax will be raised from ha 5,000 to rs 10,000   sub-clatue (b) seeks to omit section 6a of the gift-tax act, 1958, relating to the aggregation of the value of taxable gifts to the same donee during the relevant previo,us year and during anyone or mor~ of the four previous years hnmediately preceding such previous year with the value of the taxable gifts made by the assessee during the reletant previous year ' sub-clause (c) seeks to substitute the schedule to the act containing the rate schedule of gift-tax, by a new rate schedule under the new rate schedule, taken together with the amendment to section 5(2) proposed to be made by sub-clause (a)(ii), the incidence of gift-tax will be reduced at all levels clause 43' seeks to make certain amendments to the companies ~·tprolitsj!'slvtaiact,' 19m  ':, l :,~~,~l~~jm:~~{~,!\,~~l~(, 1,1~ j,~1 ' ' , - (a) (i) seeks to substitute liub-c1aus~ (b) ef (i) of rule 2 of the first schedule to the said act by 'sub-clause, the object of this amendment is to bring the ons of sub-clause (b) in line with the provisions in para-f of part i of the first schedule to the bill for the, levy of 'on certain companies with reference to the "relevant amount butions of dividends" by such companies sub-clause (a) (ii) seeks to insert a new sub-clause (c) in (i) of rule 2 of the fir&t schedule, with retrospective from the commencement of the companies (profits) su r-act the proposed sub-clause (e) provides that in comthe chargeable profits of a company under the first edule, no deduction will be allowed for the additional incomeif any, payable by the company under section 104 of thfj iou'"'vu"'" tax act for its failure to distribute dividends up to thl! red statutory percentage sub-clause (b) (i) (1) seeks to reduce the rate of surtax 40 per cent to 35 per cent of the net chargeable profit~ sub-clause (b) (i) (2) seeks to omit the first and second pro- , to paragraph 1 of the third schedule, under which com-,,,,,,,uh - :j were entitled to a rebate of 20 per cent of the surtax a'-table to the profits and gains derived by them frolll fied priorhy industries the omission of these two provi$oi consequential to the provision sought to be made in the e-tax act by clause 15 of the bill, for a deduction in cornting the total income of the company of an amount equal to i , per cent of its profits and gains from specified priority industries sub-clause (b) (i) (3) seeks to amend the third proviso te ;paragraph 1 of the third schedule this amendment is being " made in view of the position that no provision has been madf! ill :,' the bill for th'e charging of tax on companies; with referenc~ to  ;" the amount of their bonus issues sub-clause (b) (ii) seeks tcl omit paragraph 2 of th~ thirf schedule which contained the list of articlee and thing~ relating to priority industries this paragraph i~ being omitted for tile reasons indicated in the notes on sub-cll\us~ (b) (i) (2) 'clause 44 seeks to levy up to the 31st may, 1967 a special duty customs clause 45 seeks to continue the levy of regulatory duty of custom ,::,up to the] 5th july, 1967, on a flexible basis within the specified ceilin~ ,'i~" ;:r:ratei, for regulating or bringing greater economy in importl, clawe ~ se~~' to maintain for another year the status quo in rega"td to commitm~ts under the general agreement on tariffs and trade i clause 47-sub-clauu- (a) seeks to raise the rates of duty on sug~r; sub-clause (b) seeks to raise the rates of duty on certain varieties of unmanufactured tobacco and cigars and cheroots; sub-clause (c) seeks to raise the rate of duty on diesel oil not otherwise specuied; sub-clause (d)' seeks to levy an excise duty on products of the kind khown as optical bleaching agents; sub-cla'1lse (e) seeks to raise the rate of duty and to substitute a specific rate for the existing ad valorem rate of duty on carbonic acid (carbon dioxide); sub-clause (1)· seeks to levy excise duty on organic surfaceactive agents and surface-active preparations; sttb-clattse (9) seeks to taise the rate of duty on rayon and syhthetic' fibres and yarn; sub-clause' (h) seeks to raise the rates of duty on cotton twist, yarn, and' thread, all sorts; sub-clause (i) seeks to raise the rates of du~y on cotton fabrics; sub-clause (j) seeks to revise the tariff classification of certain manufactures of iron -and steel and to raise the rate of duty on pipes arid, tubes; sub-clause (k) seeks to clarify the tariff description of item no 33b (i) relating to electric wires and cables clau,se 48' seeks to continue up to the 31st may, 1967' the existing special duties of excise, czause 49 seeks to provide for levy of regulatory duties of excise up to the 15th july, 1967 on a flexible basis within the spec;ified ceiling rate for regulating or bringing greater economy in consumption; ci<m-ae'j60  like section 82 of the finance act, 1965 provide, _ ' tb,~, _uahall be duty fre~ for tljlotber fear  , ~- 1_ \_~"_ •• __ ,'-'>m-' \ __ 6 ",_ - •• _~, ••• ,  '" '  :section 8 of the central sales tax act, 1956 provides for the of tax on inter-state sales sub-se'ction (1) lays down that respect of sales to government and to dealers registered under act, the rate shan be 2 per cent it is propo'sed to raise this to 3 per cent to sub-section (2a) of that section is section 15 of the" said act lays down that no state ~hall levy sales-tax on goods declared to be of specir] importance' in fnter"-state trade or commerce under section 14 of that act, at a '," rate exceeding 2 per cent it is proposed to trise this ceiling to 3 per cent this would giw' the state<; a bigger ceiling to refix their rates of tax on such goods, if they so desire the proposed increasp in the rates of tax will be effective on and from the 1st july 19f16 clause 52 seeks to amend section 4a of the preferpnce shares lation of dividends) act 1960 the proposeo amendment will e companies who arp entit]eri to clf'ol1ct in ('orne-tax from the on preff'rence shclres cleclrtreo by them after the 28th ry 1966 to make such dpnuction at thp ratp of 27':1ner ('ent on full amount of the dividend which they are reouiren to pay, that to say, on the amount of the stipulated dividend together with t~e additional dividend of ] 1 per cent of the stipulated dividend which ',th!'y are statutorily obli~ed to fla v under section ~(1) of the prpference shares (regulation of dividends) act, ] 960 clau<;e 53 seekl> to amend section 32 of the unit trust of india act 1963 under the existing provisions of this section, where the total income of an individual unit-holder, exc1usive of the 'qualifying dividend' (that is the amount of dividf'nds up to rs 1,001  received by him from the trust) does not exceed rs 20,000, the 'qualifying dividend' is not included in computing his total income where the individual unit-halder's total income, exclusive of the 'qualifying dividend' excems rs 20000 the 'qualifying dividend' is included ~':' in computing his total incom~ but the tax calculated on the tobl :" income is reduced by an amount equal to 25 per cent of the 'qualifying dividend' the effect of the proposed amendmc'nt will be that the amount of dividends up to rs 1000 received by an individual unit-holder from the trust will not be included in his total income, irrespective of the afflqunt 01 his other income  memorandum regarding delegated legislatio~clause 2 (5) (d) of the bill empowers the central board of direct   taxes to make rules for the purpose of computing the amount of any profits and gains derived by an assessee from the export of any goods or merchandise out of india in respect of which he may claim deductions under the proposed clause 2(5) (a) (i) the matter in respect of which rules may be made is one of procedure and detail therefore, the delegation of legislative power is of a normal character  a bill to give effect to the financial proposals of the central government for the financial year, 1966-&{   (shn· sachindra chaudhri, minister 0/ finance) 