Report No. 12
Chapter III
Incomes which do not form Part of Total Income
11. Incomes not included in total income.-
In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included therein-
(1) agricultural income;
[Agricultural income] [Section 4(3)(viii)]
(2) any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the holder of the estate belonging to the family;
[Income received as member of Hindu undivided family] [Section 14(1)]
(3) any receipts which are of a casual and non-recurring nature, unless they are-
(i) capital gains, chargeable under the provisions of section 45 [12B, part re: charge]; or
(ii) receipts arising from business or the exercise of a profession, vocation or occupation; or
(iii) receipts by way of addition to the remuneration of an employee;
[Casual receipts] [Section 4(3)(vii)]
(4) in the case of a resident-
(i) the unremitted foreign income chargeable to income-tax under clause (c) of subÂsection (1) of section 4 [section 4(b)(ii)], subject to the following limit, that is to say,-
(a) the amount not to be included in the total income by virtue of this sub-clause shall not exceed four thousand five hundred rupees; and
(b) where any part of such unremitted foreign income consists of salaries paid by the Government, a local authority or a corporation established by a Central, State or Provincial Act, the amount of such salaries not to be included as aforesaid shall be further limited to a sum calculated at the rate of one thousand rupees for each month of service in respect of which the salaries are received abroad;
[Section 4(1), 3rd proviso]
(ii) any income accruing or arising outside India and chargeable to income-tax by virtue of clause (d) of sub-section (1) of section 4 (4(1)(b)(iii)], if he was a nonÂresident in two out of the three years immediately preceding the previous year;
[Section 4(1), 4th proviso]
(iii) where the case does not fall under sub-clause (ii), income accruing or arising outside India and chargeable to income-tax by virtue of section 4(1)(d) [4(1)(b)(iii)], if within three months of the date of receipt in India of such income the assessee makes payment of the amount of income-tax, interest or penalty or other sum, if any, due from him on such date;
[Section 4(1), 5th proviso]
(iv) if such person is not ordinarily resident in India during the previous year, income which accrues or arises to him without India and is neither derived from a business controlled in or a profession or a vacation set up in India nor brought into or received in India by him during the previous year;
[Foreign income of residents] [Section 4(1), 2nd proviso]
(5) in the case of a non-resident-
(i) any income from interest on, or from premium on the redemption of, any bonds issued by the Central Government under a loan agreement between the Central Government and the International Bank for Reconstruction and Development, or by any industrial undertaking or financial corporation in India under a loan agreement with the said Bank which is guaranteed by the Central Government.......
[Section 4(3)(xvi)]
(ii) any income from interest payable without India on a loan issued for public subscription before the 1st day of April, 1938:
Provided that income referred to in sub-clause (ii) above shall be included in the total world income of the non-resident:
[Non-residents] [Section 4(3)(xx)]
(6) subject to such conditions as the Central Government may prescribe, the value of any travel concession or assistance received by or due to any person, being a citizen of India, from his employer for himself, his wife and children, in connection with his proceeding on leave to his home-town or village in India;
[Travel concession for citizens] (Section 4(3)(via), para. (b)]
(7) in the case of an individual who is not a citizen of India-
(i) subject to such conditions as the Central Government may prescribe, passage moneys or the value of any free of concessional passage received by or due to such individual from his employer for himself, his wife and children, in connection with his proceeding on home leave out of India;
[Section 4(3)(via), para (a)]
(ii) the remuneration received by a Consul General, Consul, Vice Consul or Consular Agent of a foreign State from such State for service in such capacity;
[Section 4(3)(x)(b)]
(iii) the remuneration received by an employee of the consulate of a foreign State.........from State for service in such capacity;
[Section 4(3)(x)(c)]
(iv) the official salary of a Trade Commissioner or other official representative' 'in India of a foreign State, if the official salary of the corresponding official, if any, of the Central Government resident for similar purposes in the country concerned is similarly exempted from payment of income-tax; or super-tax or any corresponding tax in that country;
[Section 4(3)(x)(d)]
(v) the official salary of a member of the staff of a Trade Commissioner or official representative referred to in sub-clause (iv), when such member is a subject of the country represented, if the official salary of the members of the staff of the corresponding officials of the Central Government is similarly exempted from payment of income-tax or super tax or any corresponding tax in that country;
[Foreign nationals] [Section 4(3)(x)(e)]
(8) the remuneration received by an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled-
(i) the foreign enterprise is not engaged in any trade or business in India;
(ii) the employee is not a citizen of India;
(iii) his stay in India does not exceed in the aggregate a period of ninety days in such previous year;
(iv) his stay in India did not exceed in the aggregate a period of ninety days in any financial year prior to the previous year; and
(v) such remuneration is not liable to be deducted from the income, of the employer chargeable under this Act;
[Employee of foreign enterprises] [Section 4(3)(xiv)]
(9) the remuneration, chargeable under the head "Salaries" for services rendered by an individual, who is not a citizen of India, as a technician in the employment of Government or of a local authority or of any corporation set up under any special law or in any business carried on in India, if he was not resident in any of the four financial years immediately preceding the financial year in which he arrived in India, to the extent mentioned below-
[Foreign technicians] (Section 4(3)(xiva), main Para]
(i) where a contract of service was approved by the Central Government before the commencement of his service such remuneration due to or received by such individual during the financial year in which he arrived in India and the two financial years next following;
[Section 4(3)(xiva), 2nd Proviso]
(ii) in other cases, such remuneration due to or received by such individual for the period of three hundred and sixty five days in all commencing from the date of his arrival....
[Section 4(3)(xiva), 1st Proviso]
Explanation 1.-For the purposed of this clause, services rendered by an individual in relation to a business in India before its commencement shall be deemed to be services rendered by him in a business carried on in India.
Explanation 2.-"Technician" means a person having specialised knowledge and experience in constructional or manufacturing operations, or in mining or in the generation or distribution of electricity or any other form of power, who is employed in India in a capacity in which such specialised knowledge and experience are actually utilized:
[Section 4(3)(xiva), Expin.]
Provided that, in relation to-
(a) a person to whom sub-clause (i) of this clause applies and whose contract of service was approved by the Central Government before the 1st day of March, 1958, or
(b) any other person who arrived in India before the 1st day of April, 1958, "technician" means a person having specialised knowledge in industrial arts and sciences and having experience in industrial practice who is employed in India in a capacity in which such specialised knowledge and experience are actually utilized.
[Cf. section 13(1), Finance Act, 1958, which continues the definition as amended by the Finance Act, 1958 for certain cases.]
(10) (i) in the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)-
(a) the remuneration received directly or indirectly from the Government of that foreign State for such duties, and
(b) any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State;
(ii) any income of the members of the family of such individual accompanying him to India, which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State;
[Persons working under Technical Assistance Programmes] [Section 4(3)(xv)]
(11) any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or under any similar scheme of a State Government, a local authority or a corporation established by a Central, State or Provincial Act;
[Death-cum-retirement gratuity] [Section 7(1), Expl. 2, proviso, part]
(12) any payment from a piJovident fund to which the Provident Funds Act, 1925 (19 of 1925), applies;
[Payment from a Provident Fund] [Section 7(1), Expl. 2, Proviso, part]
(13) the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in section 296 [58G(2)];
[Accumulated balance in recognised provident fund] ]New]
(14) any payment from an approved superannuation fund made on the death of a beneficiary or in lieu of or in commutation of an annuity, or by way of refund of contributions on the death of a beneficiary or on his leaving the employment in connection with which the fund is, established;
[Payment from approved superannuation fund] [Section 7(1), Expin. 2, proviso, part]
(15) any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of section 17, clause (3) [7(1)1, specifically granted to meet expenses wholly and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that" purpose;
[Allowance for expenses] [Section 4(3)(vi)]
(16) (i) interest on the 10-year Treasury Savings Deposits Certificates or the monthly payments on the 15-year Annuity Certificates issued by or under the authority of the Central Government for an amount not exceeding the maximum amount which is permitted to be invested therein;
[Interest] [Section 4(3)(xvii)]
(ii) interest on deposits in Post Office Savings Bank, Post Office Cash Certificates, Post Office National Savings Certificates and Post Office National Plan Certificates for amounts not exceeding in each case the maximum amount which is permitted to be deposited or invested therein;
[Section 4(3)(xviia)]
(iii) interest on securities held by the Issue Department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949;
[Section 4(3)(xviii]
(iv) interest payable-
(a) by Government or a local authority on moneys borrowed by it from sources outside India from any non-resident or from any institution established outside India;
(b) by an industrial undertaking in India on moneys borrowed by it under a loan agreement entered into with any such financial institution in a foreign country as may be approved in this behalf by the Central Government by general or special order;
(c) by an industrial undertaking in India on any moneys borrowed or debt, incurred by it in a foreign country in respect of the purchase outside India of capital plant and machinery in any case where the loan or debt is approved by the Central Government, having regard to its terms generally and in particular to the terms of its repayment;
[Interest] [Section 4(3)(xviib)]
(17) scholarships, granted to meet the cost of education;
[Scholarships] [New] (See item 5 of Notification No. 878F (Income-Tax) dated 21-8-1922]
(18) any income chargeable under the head "Income, from house property" in respect of a building the erection of which is begun and completed between the 1st day of April, 1946, and the 31st day of March, 1956, (both dates inclusive), for a period of two years from the date of such, completion;
[Income from new building] [Section 4(3)(xii)]
(19) any daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof;
[Daily allowances of members of Parliament and other Legislatures] [Section 4(3)(xix)]
(20) any payment made, whether in cash or in kind, by the Central Government or any State Government in pursuance of gallantry awards instituted or approved by the Central Government;
[Gallantry awards] [Section 4(3)(xii)]
(21) any amount received by the Ruler of an Indian State as privy purse under article 291 of the Constitution;
[Privy Purse] [Section 4(3)(x)(a)]
(22) (i) income of a local authority chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources";
(ii) income from a trade or business carried on by a local authority which accrues or arises from the supply of a commodity or service within its own jurisdictional area;
[Local authorities] [Section 4(3)(iii) part]
(23) any income of a scientific research association for the time being approved for the purposes of section 35(1) (ii) [10 (2)(xiii)] which is applied solely to the purposes of that association;
[Scientific Research Association] [Section 4(3)(xiii)]
(24) any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit;
[New] [See item 12 of Notification No. 878F (Income-tax) dated 21-3-1922]
[Educational Institutions]
(25) any income chargeable under the head "Interest on securities", "Income from house property" and "Income from other sources" of a registered trade Union within the meaning of the Indian Trade Unions Act, 1926 (16 of 1926), formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen;
[Certain incomes of Trade Unions] [Section 4(3)(xia)]
(26) (i) interest on securities which are held by, or are the property of, any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securities;
[Section 4(3)(iv)]
(ii) any income received by trustees on behalf of a recognised provident fund; [Section 4(3)(ix)]
(iii) income of an approved superannuation fund, to the extent provided in section 309 [section 58R, main pars];
[Income of provident and superannuation funds] [New]
(27) any income of a member of a Scheduled "Tribe, as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part A or Part B of the table appended to paragraph 20 of the Sixth Schedule to the Constitution, or in the Union Territories of Manipur and Tripura, provided such member is not in the service of Government.
[Scheduled Tribes] [Section 4(3)(xxi)]
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