Income Tax Act

Official PDF pages 281–285

SOURCE PDF PAGE 281
juridical person referred to in section 2( 77 )( g ), if the adjusted total income
of such person does not exceed twenty lakh rupees; or
( iv )   any specified fund referred to in Schedule VI (Note 1).
( e ) Where any tax is paid under clause ( a ) by an assessee, then, credit shall be allowed
to him of an amount which shall be the excess of alternate minimum tax over the
regular income-tax payable of that year.
( f ) While allowing credit under clause ( e ),—
( i )   no interest shall be payable on the tax credit so allowed; and
( ii )   where tax credit in respect of any income-tax paid in any country or
specified territory outside India, under section 159(1) or (2), allowed
against the alternate minimum tax payable exceeds such tax credit
admissible against the regular income-tax payable by the assessee, then,
while computing the credit under clause ( e ), such excess amount shall
be ignored.
( g ) Tax credit determined under clause ( e ) shall be carried forward and—
( i )   set off in a year, when the regular income-tax exceeds the alternate
minimum tax; and
( ii )   such set off in respect of brought forward tax credit shall be allowed for
any tax year to the extent of the excess of regular income-tax over the
alternate minimum tax for that tax year,
and such carry forward shall not be allowed beyond the fifteenth tax year immediately
succeeding the tax year in which the tax credit becomes allowable under clause ( e ).
( h ) Where as a result of any order passed under this Act, tax payable under this Act
is reduced or increased, tax credit allowed under clause ( e ) shall also be reduced
or increased accordingly.
( i ) Irrespective of anything contained in clause ( c ) or clause ( d ), the credit for tax
paid under clause ( a ) shall be allowed in accordance with the provisions of clauses
( e ), ( f ), ( g ) and ( h ).
( j ) Every person to which this sub-section applies, shall furnish a report in the
prescribed form from an accountant, certifying that the adjusted total income and
alternate minimum tax in its case have been computed as per the provisions of this
sub-section before the specified date referred to in section 63.
35
[ (3)( a ) The provisions of this sub-section shall be applicable only to an assessee, being
a domestic company, that has exercised the option under section 200(5) or section
201(2) for a tax year, beginning on or after the 1st April, 2026.
( b ) Where any amount of credit, in respect of tax paid, was allowed to be carried forward
to the assessee under the provisions of section 115JAA of the Income-tax Act, 1961
(43 of 1961), as on 31st March, 2026,––
35.   Sub-sections (3), (4) and (5) substituted for sub-section (3)   by the Finance Act, 2026, w.e.f.
1-4-2026 . Prior to its substitution, sub-section (3) read as under :
“(3) Save as otherwise provided in this section, all other provisions of this Act shall apply to
every assessee mentioned in this section.”

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( i )   such credit brought forward shall be allowed to be set off in any tax year to
the extent of 25% of the tax payable on the total income computed as per
the other provisions of this Act for that tax year;
( ii )   the remaining credit shall be carried forward to the subsequent tax year;
and
( iii )   such carry forward or set off of tax credit shall not be allowed beyond the
fifteenth tax year immediately succeeding the tax year in which the tax
credit first became allowable under section 115JAA of the Income-tax Act,
1961 (43 of 1961).
( c ) Where, as a result of any order passed under this Act, tax payable under this Act is
decreased or increased, as the case may be, tax credit allowed to be set off under clause
( b ) shall also be decreased or increased, accordingly.
( d ) In case of conversion of a private company or unlisted public company into a
limited liability partnership under the Limited Liability Partnership Act, 2008 (6 of
2009), the provisions of clauses ( a ) and ( b ) shall not apply to the successor limited
liability partnership.
(4)( a ) The provisions of this sub-section shall be applicable only to an assessee, being
a foreign company.
( b ) Where, any amount of credit in respect of tax paid was allowed to be carried forward
to the assessee under the provisions of section 115JAA of the Income-tax Act, 1961
(43 of 1961), as on 31st March, 2026,––
( i )   such tax credit shall be carried forward and set off in a tax year, when tax
payable on the total income computed as per the provisions of this Act
exceeds the minimum alternate tax computed as per provisions of sub-
section (1);
( ii )   such set off in respect of brought forward tax credit shall be allowed for any
tax year to the extent of the difference between the tax liability on the total
income computed as per the other provisions of this Act and the minimum
alternate tax for that tax year; and
( iii )   such carry forward or set off of tax credit shall not be allowed beyond the
fifteenth tax year immediately succeeding the tax year in which the tax
credit first became allowable under section 115JAA of the Income-tax Act,
1961 (43 of 1961).
( c ) Where, as a result of any order passed under this Act, tax payable under this Act is
decreased or increased, as the case may be, tax credit allowed to be set off under clause
( b ) shall also be decreased or increased, accordingly.
( d ) In case of conversion of a private company or unlisted public company into a
limited liability partnership under the Limited Liability Partnership Act, 2008 (6 of
2009), the provisions of clauses ( a ) and ( b ) shall not apply to the successor limited
liability partnership.
(5) Save as otherwise provided in this section, all other provisions of this Act shall
apply to every assessee mentioned in this section. ]

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E.—Special provisions relating to non-residents and foreign companies
Tax on dividends, royalty and fees for technical service in case of foreign
companies.
5
207.   (1) The income-tax payable on the total income of a non-resident (not being
a company) or of a foreign company, which includes any income specified in
the column B of the Table below, shall be the aggregate of income-tax computed at
the rate specified in the column C applied on the corresponding income specified
in column B.
TABLE
Sl.
No.
Income   Rate of Income-
tax payable
A   B   C
1.   Dividend [other than dividends specified against serial
number 2].
20%
2.   Dividend received from a unit in an International Financial
Services Centre.
10%
3.   Interest received from Government or an Indian concern
on moneys borrowed or debt incurred by Government or
the Indian concern in foreign currency not being interest
referred to against serial numbers 4 and 5.
20%
4.   Interest received from an infrastructure debt fund referred
to in Schedule VII (Table: Sl. No. 46).
5%
5.   Interest of the nature and extent referred to in section
393(2) (Table: Sl. Nos. 2, 3 and 4)
7
.
Rates   specified
in section 393(2)
(Table: Sl. Nos. 2,
3 and 4).
6.   Distributed income being interest referred to in section
393(2) (Table: Sl. No. 6)
8
.
Rate specified in
section   393(2)
(Table: Sl. No. 6).
7.   Income received in respect of units, purchased in foreign
currency, of a Mutual Fund specified in Schedule VII
(Table: Sl. No. 20 or 21) or of the Unit Trust of India.
20%
8.   Total income as reduced by income referred to against
serial numbers 1 to 7.
Rates in force.
(2) Where the total income of a non-resident (not being a company) or of a foreign
company, includes any income by way of royalty or fees for technical services received
from Government or an Indian concern in pursuance of an agreement made with
Government or an Indian concern after the 31st March, 1976, other than income
referred to in section 59(1), and—
( a )   the agreement is approved by the Central Government where such agree -
ment is with an Indian concern; or

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( b )   where the agreement relates to a matter included in the industrial policy,
for the time being in force, of the Government of India, it is as per that
policy,
then, subject to the provisions of sub-section (3), the income-tax payable shall be
the aggregate of income-tax computed at the rate specified in the column C applied
on the corresponding income specified in column B of the Table below:—
TABLE
Sl.
No.
Income   Rates of income-tax payable
A   B   C
1.   Royalty other than income referred to in
section 59(1).
20%
2.   Fees for technical services other than income
referred to in section 59(1).
20%
3.   Total income as reduced by income referred
to against serial numbers 1 and 2.
Rates in force.
(3) Where the royalty referred to in sub-section (2) is in consideration for the transfer
or grant of all or any rights (including the granting of a licence)—
( a )   in respect of copyright in any book to an Indian concern; or
( b )   in respect of any computer software to a person resident in India,
then the provisions of sub-section (2) shall apply in relation to such royalty without
application of provisions of clause ( a ) or ( b ) of that sub-section.
(4) For the purposes of this section,—
( a )   “computer software” means any computer programme recorded on any
disc, tape, perforated media or other information storage device; or any
customised electronic data or any product or service of similar nature
as may be notified by the Board, which is transmitted or exported from
India to a place outside India by any means;
( b )   “fees for technical services” shall have the meaning assigned to it in
section 9;
( c )   “royalty” shall have the meaning assigned to it in section 9.
(5) No deduction in respect of any expenditure or allowance shall be allowed under
sections 28 to 58, 60 and 61 and section 93 for computing income referred to in
sub-sections (1) and (2).
(6) Where the gross total income of an assessee—
( a )   consists only of the income referred to in sub-section (1) (Table: SI. No.
1 to 7), no deduction shall be allowed under Chapter VIII and Schedule
XV;

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( b )   includes any income referred to in sub-section (1) (Table: Sl. No. 1 to 7),
the gross total income shall be reduced by such income and the deduction
under Chapter VIII shall be allowed as if such reduced amount were the
gross total income of the assessee.
(7) The provisions of sub-section (6) shall not apply to a deduction allowed to Unit
of an International Financial Services Centre under section 147.
(8) It shall not be necessary for an assessee to furnish a return of income under
section 263(1), if—
( a )   the total income during the tax year consisted only of income referred
to in sub-section (1) (Table: Sl. Nos. 1 to 7) and sub-section (2) (Table:
Sl. Nos. 1 and 2); and
( b )   the tax deductible at source under the provisions of Chapter XIX-B has
been deducted from such income at a rate not less than the rate specified
in sub-sections (1) and (2).
Tax on income from units purchased in foreign currency or capital gains
arising from their transfer.
208.   (1) The income-tax payable on the total income of an assessee, being an
overseas financial organisation (herein referred to as Offshore Fund), which
includes income specified in column B of the Table below, shall be the aggregate
of income-tax computed at the rate specified in the column C applied on the corre -
sponding income specified in column B.
TABLE
Sl.
No.
Income   Rate of income-
tax payable
A   B   C
1.   Income received in respect of units purchased in
foreign currency.
10%
2.   Long-term capital gains arising from the transfer of
units purchased in foreign currency.
12.5%
3.   Total income as reduced by income referred against
serial numbers 1 and 2.
Rates in force.
(2) Where the gross total income of the Offshore Fund—
( a )   consists only of income from units or income by way of long-term cap -
ital gains arising from the transfer of units, or both, no deduction shall
be allowed to the assessee under sections 28 to 58, 60 and 61 or section
93(1)( a ) or ( e ) or under Chapter VIII;
( b )   includes any income referred to in clause ( a ),—
( i )   the gross total income shall be reduced by such income; and
( ii )   the deduction under Chapter VIII shall be allowed as if the gross
total income so reduced were the gross total income of the assessee.