Section 36 - Other deductions - Income-tax Act, 1961

Other deductions. 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (i) the amount of any premium paid in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of the business or profession; 1 [ (ia) the amount of any premium paid by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society; ] 2 [ (ib) the amount of any premium 3 [ paid by any mode of payment other than cash ] by the assessee as an employer to effect or to keep in force an insurance on the health of his employees under a scheme framed in this behalf by- (A) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government; or (B) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); ] (ii) any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission; 4 [ **** ] 5 [ **** ] (iia) 6 [****] (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession : 7 [Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset 72 [ **** ] (whether capitalised in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. ] Explanation .- Recurring subscriptions paid periodically by shareholders, or subscribers in Mutual Benefit Societies which fulfil such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause; 8 [ (iiia) the pro rata amount of discount on a zero coupon bond having regard to the period of life of such bond calculated in the manner as may be prescribed. Explanation .-For the purposes of this clause, the expressions- (i) discount means the difference between the amount received or receivable by the infrastructure capital company or infrastructure capital fund or public sector company 66 [ or scheduled bank ] issuing the bond and the amount payable by such company or fund or public sector company 66 [ or scheduled bank ] on maturity or redemption of such bond; (ii) period of life of the bond means the period commencing from the date of issue of the bond and ending on the date of the maturity or redemption of such bond; (iii) 9 [ **** ]] (iv) any sum paid by the assessee as an employer by way of contribution towards a recognised provident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognising the provident fund or approving the superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head Salaries or to the contributions or to the number of members of the fund; 68 [ (iva) any sum paid by the assessee as an employer by way of contribution towards a pension scheme, as referred to in section 80CCD, on account of an employee to the extent it does not exceed 81 [ fourteen per cent. ] of the salary of the employee in the previous year. Explanation. -For the purposes of this clause, salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. ] (v) any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust; 10 [ (va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee s account in the relevant fund or funds on or before the due date. 79 [ Explanation 1 ] .-For the purposes of this clause, due date means the date by which the assessee is required as an employer to credit an employee s contribution to the employee s account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise ;] 80 [ Explanation 2.- For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the due date under this clause; ] (vi) in respect of animals which have been used for the purposes of the business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, the difference between the actual cost to the assessee of the animals and the amount, if any, realised in respect of the carcasses or animals; (vii) subject to the provisions of sub-section (2), the amount of 11 [ any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year ]: 12 [Provided that in the case of 13 [ an assessee ] to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. ] 73 [Provided further that where the amount of such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof becomes irrecoverable or of an earlier previous year on the basis of income computation and disclosure standards notified under sub-section (2) of section 145 without recording the same in the accounts, then, such debt or part thereof shall be allowed in the previous year in which such debt or part thereof becomes irrecoverable and it shall be deemed that such debt or part thereof has been written off as irrecoverable in the accounts for the purposes of this clause. ] 14 [ 69 [ Explanation 1 ] .-For the purposes of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee; ] 70 [ Explanation 2 .-For the removal of doubts, it is hereby clarified that for the purposes of the proviso to clause (vii) of this sub-section and clause (v) of sub-section (2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts under clause (viia) and such account shall relate to all types of advances, including advances made by rural branches ] 15 [ (viia) 16 [ in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank [not being 17 [ **** ] a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank 18 [ or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank ] , an amount 19 [ not exceeding 77 [ eight and one-half per cent. ]] of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding 20 [ ten ] per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner : 21 [Provided that a scheduled bank or a non-scheduled bank referred to in this sub-clause shall, at its option, be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent of the amount of such assets shown in the books of account of the bank on the last day of the previous year: ] 22 [Provided further that for the relevant assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, the provisions of the first proviso shall have effect as if for the words five per cent , the words ten per cent had been substituted : ] 23 [Provided also that a scheduled bank or a non-scheduled bank referred to in this sub-clause shall, at its option, be allowed a further deduction in excess of the limits specified in the foregoing provisions, for an amount not exceeding the income derived from redemption of securities in accordance with a scheme framed by the Central Government: Provided also that no deduction shall be allowed under the third proviso unless such income has been disclosed in the return of income under the head Profits and gains of business or profession. ] 24 [ Explanation .- For the purposes of this sub-clause, relevant assessment years means the five consecutive assessment years commencing on or after the 1st day of April, 2000 and ending before the 1st day of April, 2005; ] (b) a bank, being a bank incorporated by or under the laws of a country outside India, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VIA); ] 25 [ (c) a public financial institution or a State financial corporation or a State industrial investment corporation, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) :] 26 [Provided that a public financial institution or a State financial corporation or a State industrial investment corporation referred to in this sub-clause shall, at its option, be allowed in any of the two consecutive assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, of an amount not exceeding ten per cent of the amount of such assets shown in the books of account of such institution or corporation, as the case may be, on the last day of the previous year. ] 75 [ (d) a non-banking financial company, an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A). ] Explanation .-For the purposes of this clause,- 27 [ (i) non-scheduled bank means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank; ] 28 [ (ia) ] rural branch means a branch of a scheduled bank 29 [ or a non-scheduled bank ] situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; 30 [ (ii) scheduled bank means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) 31 [ *** ] ; ] 32 [ (iii) public financial institution shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); (iv) State financial corporation means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951); (v) State industrial investment corporation means a Government company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956), engaged in the business of providing long-term finance for industrial projects and 33 [ eligible for deduction under clause (viii) of this sub-section ];] 34 [ (vi) co-operative bank , primary agricultural credit society and primary co-operative agricultural and rural development bank shall have the meanings respectively assigned to them in the Explanation to sub-section (4) of section 80P ;] 76 [ (vii) non-banking financial company shall have the meaning assigned to it in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934). ] 65 [ (viii) in respect of any special reserve created and maintained by a specified entity, an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head Profits and gains of business or profession (before making any deduction under this clause) carried to such reserve account: Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and of the general reserves of the specified entity, no allowance under this clause shall be made in respect of such excess. Explanation .-In this clause,- (a) specified entity means,- (i) a financial corporation specified in section 4A of the Companies Act, 1956 (1 of 1956); (ii) a financial corporation which is a public sector company; (iii) a banking company; (iv) a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank; (v) a housing finance company; and (vi) any other financial corporation including a public company; (b) eligible business means,- 67 [ (i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause (a), the business of providing long-term finance for- (A) industrial or agricultural development; (B) development of infrastructure facility in India; or (C) development of housing in India; ] (ii) in respect of the specified entity referred to in sub-clause (v) of clause (a), the business of providing long-term finance for the construction or purchase of houses in India for residential purposes; and (iii) in respect of the specified entity referred to in sub-clause (vi) of clause (a), the business of providing long-term finance for development of infrastructure facility in India; (c) banking company means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (d) co-operative bank , primary agricultural credit society and primary co-operative agricultural and rural development bank shall have the meanings respectively assigned to them in the Explanation to sub-section (4) of section 80P; (e) housing finance company means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes; (f) public company shall have the meaning assigned to it in section 3 of the Companies Act, 1956(1 of 1956) ; (g) infrastructure facility means- (i) an infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA, or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfils the conditions as may be prescribed; (ii) an undertaking referred to in clause (ii) or clause (iii) or clause (iv) or clause (vi) of sub-section (4) of section 80-IA; and (iii) an undertaking referred to in sub-section (10) of section 80-IB; (h) long-term finance means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years; ] (viiia) 47 [ **** ] 48 [ (ix) any expenditure bona fide incurred by a company for the purpose of promoting family planning amongst its employees: Provided that where such expenditure or any part thereof is of a capital nature, one-fifth of such expenditure shall be deducted for the previous year in which it was incurred; and the balance thereof shall be deducted in equal instalments for each of the four immediately succeeding previous years : Provided further that the provisions of sub-section (2) of section 32 and of sub-section (2) of section 72 shall apply in relation to deductions allowable under this clause as they apply in relation to deductions allowable in respect of depreciation : Provided further that the provisions of clauses (ii), (iii), (iv) and (v) of sub-section (2) 49 [ and sub-section (5) ] of section 35, of sub-section (3) of section 41 and of Explanation 1 to clause (1) of section 43 shall, so far as may be, apply in relation to an asset representing expenditure of a capital nature for the purposes of promoting family planning as they apply in relation to an asset representing expenditure of a capital nature on scientific research; ] (x) 52 [ 50 [ **** ] ] 53 [ (xi) any expenditure incurred by the assessee, on or after the 1st day of April, 1999 but before the 1st day of April, 2000, wholly and exclusively in respect of a non-Y2K compliant computer system, owned by the assessee and used for the purposes of his business or profession, so as to make such computer system Y2K compliant computer system : Provided that no such deduction shall be allowed in respect of such expenditure under any other provisions of this Act : Provided further that no such deduction shall be admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this clause. Explanation .-For the purposes of this clause,- (a) computer system means a device or collection of devices including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, or more of which contain computer programmes, electronic instructions, input data and output data, that performs functions including, but not limited to, logic, arithmetic, data storage and retrieval, communication and control; (b) Y2K compliant computer system means a computer system capable of correctly processing, providing or receiving data relating to date within and between the twentieth and twenty-first century ;] 54 [ (xii) any expenditure (not being in the nature of capital expenditure) incurred by a corporation or a body corporate, by whatever name called, if,- (a) it is constituted or established by a Central, State or Provincial Act; (b) such corporation or body corporate, having regard to the objects and purposes of the Act referred to in sub-clause (a), is notified by the Central Government in the Official Gazette for the purposes of this clause; and (c) the expenditure is incurred for the objects and purposes authorised by the Act under which it is constituted or established; ] 55 [ (xiii) any amount of banking cash transaction tax paid by the assessee during the previous year on the taxable banking transactions entered into by him. Explanation .-For the purposes of this clause, the expressions banking cash transaction tax and taxable banking transaction shall have the same meanings respectively assigned to them under Chapter VII of the Finance Act, 2005. ] 64 [ (xiv) any sum paid by a public financial institution by way of contribution to such credit guarantee fund trust for small industries as the Central Government may, by notification in the Official Gazette, specify in this behalf. Explanation .-For the purposes of this clause, public financial institution shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); ] 62 [ (xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and gains of business or profession . Explanation .-For the purposes of this clause, the expressions securities transaction tax and taxable securities transaction shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004); ] 63 [ **** ] 71 [ (xvi) an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such taxable commodities transactions is included in the income computed under the head Profits and gains of business or profession . Explanation .-For the purposes of this clause, the expressions commodities transaction tax and taxable commodities transaction shall have the meanings respectively assigned to them under Chapter VII of the Finance Act, 2013. ] 74 [ (xvii) the amount of expenditure incurred by a co-operative society engaged in the business of manufacture of sugar for purchase of sugarcane at a price which is equal to or less than the price fixed or approved by the Government. ] 78 [ (xviii) marked to market loss or other expected loss as computed in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145. ] (2) In making any deduction for a bad debt or part thereof, the following provisions shall apply- 56 [ (i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee ;] (ii) if the amount ultimately recovered on any such debt or part of debt is less than the difference between the debt or part and the amount so deducted, the deficiency shall be deductible in the previous year in which the ultimate recovery is made; (iii) any such debt or part of debt may be deducted if it has already been written off as irrecoverable in the accounts of an earlier previous year 57 [ (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year) ], but the 58 [ Assessing ] Officer had not allowed it to be deducted on the ground that it had not been established to have become a bad debt in that year; (iv) where any such debt or part of debt is written off as irrecoverable in the accounts of the previous year 59 [ (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year) ] and the 60 [ Assessing ] Officer is satisfied that such debt or part became a bad debt in any earlier previous year not falling beyond a period of four previous years immediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply; 61 [ (v) where such debt or part of debt relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause. ] ******************* NOTES:- 1. Inserted vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 2. Substituted vide Section 9 of the Finance Act, 2006 w.e.f. 01-04-2007 before it was read as, (ib) the amount of any premium paid by cheque by the assessee as an employer to effect or to keep in force an insurance on the health of his employees under 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 (57 of 1972) and approved by the Central Government. Earlier, Inserted vide Section 2 of the Income-tax (Amendment) Act, 1986 w.e.f. 01-04-1987 3. Substituted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2008 before it was read as, paid by cheque 4. Omitted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, Provided that the deduction in respect of bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965 (21 of 1965) apply shall not exceed the amount of bonus payable under that Act. Earlier , Inserted vide Section 29 of the Payment of Bonus (Amendment) Act, 1976 w.e.f. 25-09-1975 5 Omitted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, (ii) any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission: Provided further that the amount of the bonus (not being bonus referred to in the first proviso) or commission is reasonable with reference to (a) the pay of the employee and the conditions of his service; (b) the profits of the business or profession for the previous year in question; and (c) the general practice in similar business or profession; Earlier , Amended vide Section 29 of the Payment of Bonus (Amendment) Act, 1976 w.e.f. 25-09-1975 6. Omitted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 before it was read as, (iia) a sum equal to one and one-third times the amount of the expenditure incurred on payment of any salary for any period of employment before the 1st day of March, 1984 to an employee who, as at the end of the previous year,- (a) is totally blind, or (b) is subject to or suffers from a permanent physical disability (other than blindness) which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation : Provided that the assessee produces before the Assessing Officer, in respect of the first assessment year for which deduction is claimed in relation to each such employee under this clause,- (i) in a case referred to in sub-clause (a), a certificate as to his total blindness from a registered medical practitioner being an oculist; and (ii) in a case referred to in sub-clause (b), a certificate as to the permanent physical disability referred to in the said sub-clause from a registered medical practitioner : Provided further that nothing contained in this clause shall apply in the case of an employee whose income in the previous year chargeable under the head Salaries exceeds twenty thousand rupees. Explanation 1.- In this clause, salary includes the pay, allowances, bonus or commission payable monthly or otherwise. Explanation 2.- For the removal of doubts, it is hereby declared that where a deduction under this clause is allowed for any assessment year in respect of any expenditure, deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year; Earlier , Inserted vide Section 9 of the Finance (No. 2) Act, 1980 w.e.f. 01-04-1981 And was Amended vide Section 8 of the Finance Act, 1984 w.e.f. 01-04-1984 And was Amended vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1988 7. Inserted vide Section 18 of the Finance Act, 2003 w.e.f. 01-04-2004 8. Inserted vide Section 12 of the Finance Act, 2005 w.e.f. 01-04-2006 9. Omitted vide Section 9 of the Finance Act, 2006 w.e.f. 01-04-2006 before it was read as, (iii) infrastructure capital company and infrastructure capital fund shall have the same meanings respectively assigned to them in clauses (a) and (b) of Explanation 1 to clause (23G) of section 10; 10. Inserted vide Section 9 of the Finance Act, 1987 w.e.f. 01-04-1988 11. Substituted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, any debt, or part thereof, which is established to have become a bad debt in the previous year 12. Inserted vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 13. Substituted vide Section 7 of the Finance Act, 1997 w.e.f. 01-04-1992 before it was read as, a bank 14. Inserted vide Section 25 of the Finance Act, 2001 w.e.f. 01-04-1989 15. Inserted vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 16. Substituted vide Section 2 of the Income-tax (Amendment) Act, 1986 w.e.f. 01-04-1987 before it was read as, (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 (viiia) or a bank incorporated by or under the laws of a country out-side India] or a non-scheduled bank, an amount not exceeding ten per cent. of the total income (computed before making any deduction under this clause 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, whichever is higher. Explanation : For the purposes of this clause, - (i) non-scheduled bank means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank; (ia) rural branch means a branch of a scheduled bank or a on-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; (ii) scheduled bank has the same meaning as in the Explanation to clause (iii) of sub-section (5) of section 11, but does not include a co-operative bank; Earlier , Amended vide Section 10 of the Finance Act, 1982 w.e.f. 01-04-1983 And was Amended vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 17. Omitted vide Section 14 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, a bank approved by the Central Government for the purposes of clause (viiia) or 18. Inserted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2007 19. Substituted vide Section 19 of the Finance Act, 2002 w.e.f. 01-04-2003 before it was read as, not exceeding five per cent 20. Substituted vide Section 14 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, four Earlier , Substituted vide Section 10 of the Finance Act, 1993 w.e.f. 01-04-1994 before it was read as, two 21. Inserted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 22. Inserted vide Section 19 of the Finance Act, 2002 w.e.f. 01-04-2003 23. Inserted vide Section 18 of the Finance Act, 2003 w.e.f. 01-04-2004 24. Inserted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 25. Inserted vide Section 14 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1992 26. Inserted vide Section 19 of the Finance Act, 2002 w.e.f. 01-04-2003 27. Inserted vide Section 10 of the Finance Act, 1982 w.e.f. 01-04-1983 28. Re-lettered vide Section 10 of the Finance Act, 1982 w.e.f. 01-04-1983 before it was read as, (i) 29. Inserted vide Section 10 of the Finance Act, 1982 w.e.f. 01-04-1983 30. Substituted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, ( ii ) scheduled bank has the same meaning as in the Explanation to clause ( iii ) of sub-section (5) of section 11 , but does not include a co-operative bank ; Earlier , Amended vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 31. Omitted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2007 before it was read as, , but does not include a co-operative bank 32. Inserted vide Section 14 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1992 33. Substituted vide Section 18 of the Finance Act, 2000 w.e.f. 01-04-2000 before it was read as, approved by the Central Government under clause (viii) of this sub-section 34. Inserted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2007 35. Substituted vide Section 5 of the Finance Act, 1974 w.e.f. 01-04-1975 before it was read as, an amount not exceeding (a) in the case of a Financial Corporation or a Joint Financial Corporation established under the State Financial Corporations Act, 1951 (63 of 1951), or an institution deemed under section 46 of that Act to be a Financial Corporation established by the State Government for the State within the meaning of that Act, forty per cent, (b) in the case of any other financial corporation, (i) where the paid-up share capital of the corporation does not exceed three crores of rupees, twenty-five per cent, (ii) where the paid-up share capital of the corporation exceeds three crores of rupees, ten per cent Earlier , Amended vide Section 11 of the Finance Act, 1966 w.e.f. 01-04-1966 And was Amended vide Section 15 of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 And was Amended vide Section 8 of the Finance (No. 2) Act, 1971 w.e.f. 01-04-1972 36. Inserted vide Section 7 of the Finance Act, 1997 w.e.f. 01-04-1998 37. Substituted vide Section 10 of the Finance Act, 1995 w.e.f. 01-04-1996 before it was read as, industrial or agricultural development in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) carried to such reserve account: Earlier , Amended vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 And was Amended vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 38. Substituted vide Section 14 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1996 before it was read as, before making any deduction under this section 39. Omitted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 before it was read as, Provided that the corporation or, as the case may be, the company is for the time being approved by the Central Government for the purposes of this clause : Earlier , Amended vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 40. Omitted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 before it was read as, further 41. Inserted vide Section 7 of the Finance Act, 1981 w.e.f. 01-04-1982 42. Substituted vide Section 14 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1997 before it was read as, (excluding the amounts capitalised from reserves) 43. Inserted vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 44. Substituted vide Section 14 of the Finance Act, 1992 w.e.f. 01-04-1987 before it was read as, Explanation. In this clause,- (a) financial corporation shall include a public company; (b) public company shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956). Earlier , Inserted vide Section 9 of the Finance Act, 1970 w.e.f. 01-04-1966 And was Omitted vide Section 5 of the Finance Act, 1974 w.e.f. 01-04-1975 Explanation : For the removal of doubts, it is hereby declared that in the case of a financial corporation to which sub-clause (a) applies, if the amount carried to the reserve account referred to in this clause in the accounts of the previous year relevant to the assessment year commencing on the 1st day April, 1966, falls short of twenty-five per cent. of the total income and the amount transferred to such reserve account in the accounts of the immediately succeeding previous year exceeds the amount in respect of which the corporation is entitled to the deduction under this clause for the assessment year commencing on the 1st day of April, 1967, an amount equal to such excess shall, for the purpose of allowing the deduction under this clause, be deemed to have been transferred to the reserve account in the accounts of the first-mentioned previous year; And was Inserted vide Section 6 of the Finance Act, 1979 w.e.f. 01-04-1980 And was Substituted vide Section 14 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1987 before it was read as, Explanation : In this clause, public company shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956); 45. Substituted vide Section 9 of the Finance Act, 2006 w.e.f. 01-04-2007 before it was read as, (d) infrastructure facility shall have the meaning assigned to it in clause (23G) of section 10; Earlier , Inserted vide Section 10 of the Finance Act, 1995 w.e.f. 01-04-1996 And was Substituted vide Section 7 of the Finance Act 1997 w.e.f. 01-04-1998 before it was read as, (d) infrastructure facility shall have the meaning assigned to it in section 80-IA. 46. Inserted vide Section 14 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1996 47. Omitted vide Section 14 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, (viiia) in respect of any special reserve created by a scheduled bank (other than a bank incorporated by or under the laws of a country outside India) which is engaged in banking operations outside India, an amount not exceeding forty per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) carried to such reserve account : Provided that, having regard to its capital structure, the extent of its banking operations outside India, its need for resources for such operations outside India and other relevant factors, the bank is, for the time being, approved by the Central Government for the purposes of this clause. Explanation .-For the purposes of this clause, scheduled bank has the same meaning as in clause (ii) of the Explanation to clause (viia); Earlier , Inserted vide Section 10 of the Finance Act, 1982 w.e.f. 01-04-1983 And was Amended vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 48. Inserted vide Section 11 of the Finance Act, 1965 w.e.f. 01-04-1965 49. Inserted vide Section 15 of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1967 50. Inserted vide Section 8 of the Finance Act, 1989 w.e.f. 01-04-1989 51. Substituted vide Section 18 of the Finance Act, 2003 w.e.f. 01-04-2003 before it was read as, any fund specified under clause (23E) of section 10 52. Omitted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2008 before it was read as, (x) any sum paid by a public financial institution by way of contribution towards 51 [ any Exchange Risk Administration Fund set up by public financial institutions, either jointly or separately ] Explanation .-For the purposes of this clause, public financial institutions shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); ] 53. Inserted vide Section 22 of the Finance Act, 1999 w.e.f. 01-04-2000 54. Substituted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2008 before it was read as, ( xii ) any expenditure (not being in the nature of capital expenditure) incurred by a corporation or a body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act for the objects and purposes authorised by the Act under which such corporation or body corporate was constituted or established; Earlier, Inserted vide Section 18 of the Finance Act, 2003 w.e.f. 01-04-2002 55. Inserted vide Section 12 of the Finance Act, 2005 w.e.f. 01-04-2006 56. Substituted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, (i) no such deduction shall be allowed unless such debt or part thereof (a) has been taken into account in computing the income of the assessee of that previous year or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money- lending which is carried on by the assessee, and (b) has been written off as irrecoverable in the accounts of the assessee for that previous year; 57. Inserted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 58. Substituted vide Section 2 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1988 before it was read as, Income-tax 59. Inserted vide Section 11 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 60. Substituted vide Section 2 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1988 before it was read as, Income-tax 61. Substituted vide Section 7 of the Finance Act, 1997 w.e.f. 01-04-1992 before it was read as, (v) where such debt or part of debt relates to advances made by a bank to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the bank has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause. Earlier , Inserted vide Section 10 of the Finance Act, 1985 w.e.f. 01-04-1985 62. Inserted vide Section 9 of the Finance Act, 2008 w.e.f. 01-04-2009 63. Omitted vide Section 14 of the Finance (No. 2) Act, 2009 w.e.f. 01-04-2009 before it was read as, [(xvi) an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such taxable commodities transactions is included in the income computed under the head Profits and gains of business or profession . Explanation .-For the purposes of this clause, the expressions commodities transaction tax and taxable commodities transaction shall have the meanings respectively assigned to them under Chapter VII of the Finance Act, 2008.] Earlier , Inserted vide Section 9 of the Finance Act, 2008 w.e.f. 01-04-2009 64. Inserted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2008 65. Substituted vide Section 13 of the Finance Act, 2007 w.e.f. 01-04-2008 before it was read as, ( viii ) 35 [ in respect of any special reserve created 36 [ and maintained ] by a financial corporation which is engaged in providing long-term finance for 37 [industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the profits derived from such business of providing long-term finance (computed under the head Profits and gains of business or profession 38 [ before making any deduction under this clause ] ) carried to such reserve account: ] 39 [ **** ] Provided 40 [ *** ] that where the aggregate of the amounts carried to such reserve account from time to time exceeds 41 [ twice the amount of ] the paid-up share capital 42 [ and of the general reserves ] of the corporation 43 [ or, as the case may be, the company ] , no allowance under this clause shall be made in respect of such excess. 44 [ Explanation. -In this clause,- ( a ) financial corporation shall include a public company and a Government company; ( b ) public company shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956); ( c ) Government company shall have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956); ] 45 [ ( d ) infrastructure facility means- (i) an infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA, or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfils the conditions as may be prescribed; (ii) an undertaking referred to in clause (ii) or clause (iii) or clause (iv) of sub-section (4) of section 80-IA; and (iii) an undertaking referred to in sub-section (10) of section 80-IB; ] 46 [ ( e ) long-term finance means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years; ] 66. Inserted vide Section 14 of the Finance (No. 2) Act, 2009 w.e.f. 01-04-2009 67. Substituted vide Section 14 of the Finance (No. 2) Act, 2009 w.e.f. 01-04-2010 before it was read as, (i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause (a), the business of providing long-term finance for industrial or agricultural development or development of infrastructure facility in India or construction or purchase of houses in India for residential purposes; 68. Inserted vide Section 7 of the Finance Act, 2011 w.e.f. 01-04-2012 69. Renumbered vide Section 7 of the Finance Act 2013 w.e.f. 01-04-2014 before it was read as, Explanation 70. Inserted vide Section 7 of the Finance Act 2013 w.e.f. 01-04-2014 71. Inserted vide Section 7 of the Finance Act 2013 w.e.f. 01-04-2014 72. Omitted vide Section 13 of the Finance Act, 2015 w.e.f. 01-04-2016 before it was read as, for extension of existing business or profession 73. Inserted vide Section 13 of the Finance Act, 2015 w.e.f. 01-04-2016 74. Inserted vide Section 13 of the Finance Act, 2015 w.e.f. 01-04-2016 75. Inserted vide Section 21 of the Finance Act, 2016 w.e.f. 01-04-2017 76. Inserted vide Section 21 of the Finance Act, 2016 w.e.f. 01-04-2017 77. Substituted vide Section 14 of the Finance Act, 2017 w.e.f. 01-04-2018 before it was read as, seven and one-half per cent. 78. Inserted vide Section 10 of the Finance Act, 2018 w.e.f. 01-04-2017 79. Numbered vide Section 9 of the Finance Act, 2021 w.e.f. 01-04-2021 before it was read as, Explanation 80. Inserted vide Section 9 of the Finance Act, 2021 w.e.f. 01-04-2021 81. Substituted vide Section 12 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 01-04-2025 before it was read as, ten per cent