The Finance Act, 1981--Explanatory note on provisions relating to direct taxes

Tax Holiday for Free Trade Zone units: complete multi year exemption under new section 10A and anti avoidance rules on trusts.

The Finance Act, 1981 specifies income tax and withholding rates, reduces corporate surcharge, raises personal exemption and revises slab structure; introduces section 10A granting a complete multi year tax exemption for qualifying industrial undertakings in designated free trade zones with conditions on formation, machinery use and carry forward of allowances; increases standard deductions and certain allowances; expands anti avoidance provisions by treating associations with indeterminate shares and undisclosed oral trusts as taxable at the maximum marginal rate unless properly disclosed; and introduces advance surtax payment, interest and penalty mechanisms alongside appellate fee increases and related compliance measures.