 am no 56 of 1986 - the income-tax (amendment) bill, 1988 a billfurther to amend the i'rcome-taz act, 1961 be it enacted by parliament in the thirty-seventh year of the republic (,f india as follows:-1 (1) this act may be called the income-tax 11186 - (amendment) act, short title and (2) it shall come mto force on the 1st day of april, 1987 5 commencemenl 43 of 1961 i in section 36 of the income-tax act, 1961 (hereinafter referred to as the principal act) in sub-section (1) ,-(a) after clause (ia) the following clause shall be inserted" namely:-amendmentot section 38 10 "(ib) the amount of any premium paid by cheque by the assessee as an employer to effect or to keep in· fome id insurance on the health of his employees under a scheme framed in this behalf by the general insuranee corporation ot india formed under section 9 of the general insurance business (natlonalisatton) act, 1972 nd approved ~ the ceiltraj govemmel1t;"; ,, of 19'72 i ~ (b) in clause (viia) , for the portion beginning with the words "in respect of any provision" and ending with the words ilwhichever is higher", the following shall be substituted, namely:-lein respect of any provi'sion for bad and doubtful debts made by-5 (m) a scheduled bank [not being a bank apprqved by the central government for the purposes of clause ("ma) or a bank incorporated by or under the laws of a country outside india] or a non-scheduled bank an amount not exceeding ftve per cent of the total income (computed before making 10 any deduction under this clause and chapter xia) and an amount not exceeding two per cent of the ag~gate average advances made by the rural branches of such bank computed in the prescribed manner; (b) a bank, bein~ a bank incorporated by or under the 15 laws of a country out!l:de india, an amount not exceeding flv per cent of the' total income (computed before making any deduction under this clause and chapter via) " 3 after section 80cc of the principal act, the following section shall be inserted, namely: -20 insertion of new section 80 d elrod (1) in computing the total income of an assessee, there shall be deducted, at the following rates, such sum as is specifted in sub-section (2) and paid by him by cheque in the previous year out of his income chargeable to tax, namely:-:-deduction in respect ofmedical insurance premia (i) in a case where such sum does not exceed in the aggregate :!;, three thotmand rupees, the whole of such sum; and (ii) in b'ny other case, three tbousand rupees (2) the sum referred 1x> in sub-section (1) shall be the following namely:-i , (al where the assessep is an individual, any mim paid to effect 30 or to keep in force an insurance on the health of the assessee or on the health of the wife or husband dependent parents or dependent children of thp assessee; (b) where the bflbessee is a rondu undivided family, any rum paid to effect or to keep m force an insurance on the' health of 35 any member of the family; , (e) where the assessee is an as~iatton of pel"8ons or a body of individuals consfstf~g in either ease, only of husband and wife govemedby the system of community of property in force in the ul'lion territories of dadra and nagar'havelf and goa, daman and 40 diu any lum paid to effect ot to keep m force ad inwranee <ill the health of any member of such association or body or ·on the health of the deperdent children of the members of such an association or body: 5 57 of 1972 provided that such insurance shall be in accordance with a scheme framed in this behalf by the general insurance corporation of india formed under section 9 of the general insurance business (nationalisation) act, 1972, and approved by the central government in this behalf" 4 in section 80hhb of the principal act, for the words "twenty-five 10 per cent", wherever they occur, the words "fifty per cent" shall be substituted amend· mentol section 80hhb  statement of objects and reasonsthe bill seeks to amend the income-tax act, 1961 for the following purposes, namely:-(a) to allow a deduction to an employer in respect of premia paid by him by cheque for insurance on the health of his employees in accordance with a scheme framed by the general insurance corporation of india and approved by the central gove~entj (b) to provide a deduction to an assessee up to rs 3,000 a year in respect of premia paid by him by cheque for insurance,-(i) on his health or on the health of his spouse or dependent parents and children; and (ii) in the case of a hindu undivided family or association of persons or b~dy of individuals consisting of (in either case) only of husband and wife governed by the system of community of property in force in the union territories of dadrn and nagar haveli and goa daman and diu, on the health of any member of such family; (e) to provide a deduction on provisions fc?r bad debts made by all banks up to 5 per cent of their total income and an additional 2 per cent of the aggregate average advances made by rural branches of banks; and (d) to increase the admissible deduction to 50 per cent (as against 25 per cent at present) of the profits and gains of an indian company or a person (other than a company) who is resident in india and earns income from projects outside india vishwanath pratap singh new di:rm; the 3rd may, 1986 '  ··r- , - - - - - 3 •• (1) 'the deductions provided for in the following clauses shall be other allowed in respect of the matters dealt with therein, in computing the deduc_ income referred to in section 28-lions - - - - · ' (viia) in respect of any provision for bad and doubtful debts made by a scheduled bank (not being a bank approved by the central government for the purposes of clause (vuui) or a bank incorporated by or under the laws of a country outside indiit) or a non-scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under this clau'se and chapter via) or an amount not ,exceeding two per cent of the aggregate average advances made by the rural branches of such bank, computed in the prescribed manner, whicheftr is higher - - - - 8ohrb (1) where the gross total 'income of an assessee being an indian company or a person (other than a company) who is reside'l1t in india includes any profits and gains derived from the' business 01-(a) the execution of a foreign project u'ndertaken by the assessee in pursuance of a contract entered into by him, or deduction in respect of profits and gains from projects outside india (b) the execution of any work undertaken by hiro and forming part of a foreign project undel'taken by any other person in pursuance o~ 11 contract entered into by such other person, with the govemme~t of a foreign state or any statutory or other public authority or agency in a foreign state, or a foreign enterprise, there shall, inaccotdance with and subject to the provisions of this ,ection, be allow«!, in -computing the total income of the assessee, a deduction from such proftts and gains of an amount equal to twenty-five per cent thereof: provided that the consideration for the execution of such proj~ or, al tbe case may be, of such work is ~yable in ccmvertible foreign exebange (2) for the purposes of this section,-(a) "convertible foreign 'exchange" means foreign exchange which 18 for the time being treated by the reserve bank of india as convertible foreign exchange for the purposes of the foreign wxchange regu-4ef 19!73 lati~n act, 1973, and any rules made thereunder; , , (b) "foreign project" means a proj~ tor-(i) the construction of any building, road, dam, bridge or other structure o""tlfde india; (ii) the assembly or installation of any machinery or plallt outside india; (ii'i) the execution of such other wqi'k (of whatever nature) as may be prescribed (3) the deduction under this section shall be allowed only if' the following conditions are fulfilled, namely:-(i) the assessee maintains separate accounts in respect of the profits and gains derived from the business of the executian of tile toreign proj,ect, or, as the case may be, of the work forming part of the fqreign project undertaken by him and, where the assessee is a person other ulan an indian company or a 'co-operative society, such accounts have been audited by an accountant as defined in the explanation below sub-section (2) of section 288 and the assessee furnishes, along with his return of income, the reaort of such audit in the prescribed form duly signed and verified by such accountant; (ii) an amount equal to twenty-five per cent of the profit1l and· gains relerred to in sub-section (1) is debited to the profit and loss account of the previous year in respect of which the deduction under this section is to be allowed and credited to a reserve account (to be called the "l"oreign projects reserve account") to be utilised by the assessee during a period of five years next following for the purposes of his business other than for distribution by way of dividends or profiti; (iii) an amount equal to twenty-five per cent of the proits and gains referred to in sub-sectio'll (1) is brought by the assessee in convertible foreign exchange into india, in accordance with the provisions of the foreign exchange regulation act, 1973 and any rules 46 of 1973 made thereunder, within a peri~ of six months from the end of the previous year referred to in clawe (ii) or, where the commissioner 1 satisfied (for reasons to be recorded in writing) that the assessee is, fol' reasans beyond his control, unable to do so within the said pel'iod of 'six months, within such further period as the commissioner may' allow in this behalf: provided that where the amount credited by the assessee to the foreign projects reserve account in pursuance of clause (iij or the amount brougj:1t into india by the blsebsee in pursuance of clause tiii)  or each of the said amoltnt's is less than twenty-ave per cent of the profits and gains referred to in sub-section (l), the deduction under that sub-section shall be limited to the amount so credited ill pursuance of clauae (ii) or the amount 10 broulht into india in purluadce of clause (iii), whichever is less (4) u at any time before the expiryof five years ¥,om the end of the previous year in which the deduction under sub-lection (1) is allowed, the assessee utilis~s the amount credited to  the foreign projects reserve account for distribution by w,y of dividends or proats or "for any other purpose which is not a purpose of the business of the assessee, the deduction originally allowed under sub-section (1) shall be deemed to 'have been wrongly allowed and the income-tax ojbcel' may, notwithstanding anything contained in this act, re-compute the total i11come of the assessee for the relevant previous year and make the n8clllar), amendment; and the proviliont of itction 1m lba11, 10 far ii in, be, apply thereto the period of four years specified in sub-section (7)  of that section being reckoned from the end of the previous year in which the money was so utilised (5) notwithstanding anything contained in any other provision of this chapter under the heading "c-deductions in respect of certain incomes" no part of the consideratio'll or of the income comprised in the consideration payable to the assessee for the execution of a foreign project referred· to in clause (") of sub-section (1) or of any work referred to in clautle (b) of that sub-section shall qualify for deduction for any assessment year under any such other provision  - - - - - ¥  a billfurther to amend the income-tax act, 1961 (sh7'i viahtosmth p,ctc'p singh minister of fift4'rce) 