Determination of tax in special casesCentral
Section 193 of Income Tax Act 2025 in hindi
- (1)Where the total income of an assessee, being an individual, who is a resident and an employee of an Indian company engaged in specified knowledge based industry or service or an employee of its subsidiary engaged in specified knowledge based industry or service (hereafter in this section referred to as the resident employee), includes income specified in column B of the Table below, 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.
TABLE
- (2)Where the gross total income of the resident employee—
- (a)consists only of income by way of dividends in respect of Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 1), no deduction shall be allowed to him under any other provision of this Act;
- (b)includes any income referred to in sub-section (1) (Table: Sl. No. 1 or 2),—
- (i)the gross total income shall be reduced by such income; and
- (ii)the deduction under any provision of this Act shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
- (3)The section 72(6) shall not apply for computation of long-term capital gains arising out of the transfer of long-term capital asset, being Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 2).
- (4)For the purposes of this section,—
- (a)"Global Depository Receipts" means any instrument in the form of a depository receipt or certificate (by whatever name called) created by the Overseas Depository Bank outside India or in an International Financial Services Centre and issued to investors against the issue of,—
- (i)ordinary shares of issuing company, being a company listed on a recognised stock exchange in India; or
- (ii)foreign currency convertible bonds of issuing company; or
- (iii)ordinary shares of issuing company, being a company incorporated outside India, if such depository receipt or certificate is listed and traded on any International Financial Services Centre;
- (b)"information technology service" means any service which results from the use of any information technology software over a system of information technology products for realising value addition;
- (c)"information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing inter-activity to a user, by means of an automatic data processing machine falling under heading information technology products but does not include non-information technology products;
- (d)"Overseas Depository Bank" means a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company;
- (e)"specified knowledge based industry or service" means—
- (i)information technology software; or
- (ii)information technology service; or
- (iii)entertainment service; or
- (iv)pharmaceutical industry; or
- (v)bio-technology industry; or
- (vi)any other industry or service, as specified by the Central Government, by notification;
- (f)"subsidiary" shall have the same meaning as assigned to it in section 2(87) of the Companies Act, 2013 (18 of 2013) and includes subsidiary incorporated outside India.
Summary
- Applies to a resident employee, which is an individual who is a resident of India and is employed by an Indian company engaged in a specified knowledge-based industry or service, or by its subsidiary.
- Governs the tax on income from Global Depository Receipts, which are certificates representing shares in an Indian company purchased in foreign currency, or capital gains from their transfer.
- Specifies that the tax payable is the aggregate of the taxes computed at rates specified in Column C on the corresponding income in Column B of the section's Table.
- Provides that when an employee receives Global Depository Receipts or bonds in a merged or resulting company in exchange for their original holdings, the concessional tax rules continue to apply to those new receipts or bonds.
- Defines approved intermediary as an intermediary approved under a scheme notified by the Central Government.
Practical examples
1In July 2026, Ms. Neha Gupta, a software engineer employed at a knowledge-based software company in Bangalore, receives dividends on Global Depository Receipts (GDRs) that she purchased in foreign currency. Under Section 193, because she is a resident employee of a specified knowledge-based company, her dividend income is taxed at the special concessional rate specified in Column C of the section's table.
2In December 2026, Mr. Alok Sen, an employee of a biotechnology firm in Hyderabad, transfers his GDRs and makes a long-term capital gain of 3,00,000 rupees. Under Section 193, since he acquired these GDRs under an eligible employee stock option scheme, his capital gains are computed as per the general rules of Section 72, but the tax is charged at the special rate specified in Column C of Section 193.
FAQ
1. Who qualifies as a resident employee under Section 193?
A resident employee is an individual who is a resident of India and is employed by an Indian company engaged in a specified knowledge-based industry or service, or by its subsidiary.
2. What is an approved intermediary under Section 193?
An approved intermediary is an intermediary that is approved in accordance with a scheme notified by the Central Government.
Test yourself
Q1.To which type of industries or services must the employer company belong for Section 193 to apply to its resident employee?
Q2.Under Section 193(6), who has the authority to notify the scheme for approving intermediaries?
Q3.If an employee receives GDRs in a resulting company due to a demerger, does the concessional tax treatment continue?