Section 7. Calculation of direct tax payable by the employer.

[Any direct tax payable by the employer] for any accounting year shall, subject to the following provisions, be calculated at the rates applicable to the income of the employer for that year, namely:—

(a) in calculating such tax no account shall be taken of—

(i) any loss incurred by the employer in respect of any previous accounting year and carried forward under any law for the time being in force relating to direct taxes;

(ii) any arrears of depreciation which the employer is entitled to add to the amount of the allowance for depreciation for any following accounting year or years under sub-section (2) of section 32 of the Income-tax Act;

(iii) any exemption conferred on the employer under section 84 of the Income-tax Act or of any deduction to which he is entitled under sub-section (1) of section 101 of that Act, as in force immediately before the commencement of the Finance Act, 1965 (10 of 1965);

(b) where the employer is a religious or a charitable institution to which the provisions of section 32 do not apply and the whole or any part of its income is exempt from tax under the

Income-tax Act, then, with respect to the income so exempted, such institution shall be treated as if it were a company in which the public are substantially interested within the meaning of that Act;

(c) where the employer is individual or a Hindu undivided family, the tax payable by such employer under the Income-tax Act shall be calculated on the basis that the income derived by him from the establishment is his only income;

(d) where the income of any employer includes any profits and gains derived from the export of any goods or merchandise out of India and any rebate on such income in allowed under any law for the time being in force relating to direct taxes, then, no account shall be taken of such rebate;

(e) no account shall be taken of any rebate ^1[(other than development rebate or investment allowance or development allowance)] or credit or relief or deduction (not herein before mentioned in this section) in the payment of any direct tax allowed under any law for the time being in force relating to direct taxes or under the relevant annual Finance Act, for the development of any industry.

View Act Footnotes

Note: In the legacy archives, footnotes are grouped by original PDF page numbers rather than by section.

Page 3

1. The Act has been extended to Goa, Daman and Diu by Act 6 of 1977, s. 2 and the Schedule.
2. Subs. by Act 43 of 1977, s. 3, for the long title (w.e.f. 3-9-1977).
3. The words “except the State of Jammu and Kashmir” omitted by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
4. The proviso added by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
5. The proviso added by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
6. The proviso inserted by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
7. The words, brackets, letter and figure “under clause (b) of sub-section (3)” omitted by s. 3, ibid. (w.e.f. 25-9-1975).
8. Certain words, brackets and figure added by s. 3, ibid. (w.e.f. 25-9-1975).*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammuand Kashmir and the Union territory of Ladakh.

Page 4

1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).
2. The words, brackets and figures “and includes any amount treated as such under sub-section (2) of section 34” omitted byAct 23 of 1976, s. 4 (w.e.f. 25-9-1975).
3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975).

Page 5

1. Subs. by Act 6 of 2016, s. 2, for “ten thousand rupees” (w.e.f. 1-4-2014).

Page 6

1. Subs. by Act 66 of 1980, s. 3, for section 4 (w.e.f. 21-8-1980).

Page 7

1. The proviso added by Act 8 of 1969, s. 2 (w.e.f. 26-3-1965).
2. Subs. by Act 66 of 1980, s. 4, for “development rebate or development allowance” (w.e.f. 21-8-1980).
3. Subs. by s. 4, ibid., for “Second Schedule” (w.e.f. 21-8-1980).
4. Subs. by Act 8 of 1969, s. 3, for “For the purpose of clause (c) of section 6, any direct tax payable by the employer”(w.e.f. 26-3-1965).

Page 8

1. Subs. by Act 66 of 1980, s. 5, for “(other than development rebate or development allowance)” (w.e.f. 21-8-1980).
2. Subs. by s. 6, ibid., for section 10 (w.e.f. 21-8-1980).
3. Ins. by Act 67 of 1985, s. 3 (w.e.f. 7-11-1985).
4. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).

Page 9

1. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).
2. The Explanation inserted by s. 3, ibid. (w.e.f. 1-4-2014).
3. Subs. by Act 66 of 1980, s. 8, for section 13 (w.e.f. 21-8-1980).
4. Subs. by s. 9, ibid., for section 15 (w.e.f. 21-8-1980).
5. Subs. by Act 23 of 1976, s. 12, for sub-section (1) and the Explanation thereto (w.e.f. 25-9-1975).

Page 10

1. Subs. by Act 66 of 1980, s. 10, for “Third Schedule” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 12, for “sub-section (1)” (w.e.f. 25-9-1975).

Page 11

1. Subs. by Act 23 of 1976, s. 13, for “(1) Subject to this provisions of this section, all amounts” (w.e.f. 25-9-1975).
2. Sub-sections (2) to (7) omitted by s. 13, ibid. (w.e.f. 25-9-1975).
3. Sub-section (8) omitted by Act 55 of 1973, s. 2 (w.e.f. 1-9-1973).
4. Section 20 renumbered as sub-section (1) thereof by Act 66 of 1980, s. 11 (w.e.f. 21-8-1980).
5. Ins. by s. 11, ibid. (w.e.f. 21-8-1980).

Page 12

1. Subs. by Act 66 of 1980, s. 12, for “sections 22, 23 and 25” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 16, for “and in sections 24 and 25” (w.e.f. 25-9-1975).
3. Subs. by Act 66 of 1980, s. 13, for “section 25” (w.e.f. 21-8-1980).
4. Ins. by s. 14, ibid. (w.e.f. 21-8-1980).

Page 13

1. Ins. by Act 66 of 1980, s. 15 (w.e.f. 21-8-1980).

Page 14

1. Ins. by Act 66 of 1980, s. 16 (w.e.f. 21-8-1980).
2. Ins. by Act 23 of 1976, s. 19 (w.e.f. 25-9-1975).
3. Ins. by Act 66 of 1980, s. 17 (w.e.f. 21-8-1980).

Page 15

1. Subs. by Act 66 of 1980, s. 17, for “Provided that” (w.e.f. 21-7-1980).
2. The words in brackets shall stand omitted (date to be notified) by Act 62 of 1968, s. 41.
3. Clause (vi) omitted by Act 45 of 2007, s. 4 (w.e.f. 1-4-2006).
4. Clause (vii) omitted by Act 66 of 1980, s. 18 (w.e.f. 21-7-1980).
5. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for sub-clause (d) (w.e.f. 2-7-1982).
6. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).
7. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

Page 16

1. Ins. by Act 66 of 1980, s. 18 (w.e.f. 21-8-1980).
2. Clause (x) omitted by Act 23 of 1976, s. 20 (w.e.f. 25-9-1975).
3. Subs. by s. 22, ibid., for section 34 (w.e.f. 25-9-1975).
4. Subs. by Act 6 of 2016, s. 4, for sub-section (1) (w.e.f. 1-4-2014).
5. Subs. by Act 23 of 1976, s. 24, for “or in two successive sessions” (w.e.f. 25-9-1975).
6. Subs. by s. 24, ibid., for “in which it is so laid or the session immediately following” (w.e.f. 25-9-1975).

Page 18

1. Ins. by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
2. Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on incomeis shown, the actual provision for taxes on income shall be deducted from the profit.

Page 22

1. The First Schedule renumbered as the Second Schedule by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
2. Subs. by s. 19, ibid., for “(See section 4)” (w.e.f. 21-8-1980).
3. Subs. by s. 19, ibid., for entry (d) (w.e.f. 21-8-1980).
4. Ins. by Act 23 of 1976, s. 26 (w.e.f. 25-9-1975).

Page 25

1. Subs. by Act 23 of 1976, s. 26, for sub-item (g) (w.e.f. 25-9-1975).
2. Explanation inserted by s. 26, ibid. (w.e.f. 25-9-1975).

Page 26

1. The Second Schedule renumbered as the Third Schedule by Act 66 of 1980, s. 20 (w.e.f. 21-8-1980).
2. Subs. by s. 20, ibid., for “Company” (w.e.f. 21-8-1980).
3. Ins. by s. 20, ibid. (w.e.f. 21-8-1980).

Page 29

1. Subs. by Act 66 of 1980, s. 20, for “1(iii) and 3(ii)” (w.e.f. 21-8-1980).

Page 30

1. Subs. by Act 66 of 1980, s. 21, for the Third Schedule (w.e.f. 21-8-1980).