Taxation of previous year as single unit ensures income taxed at assessment-year rates when switching from Hijri to financial year.
Income for an assessment year must be treated as a single unit: unassessed income from a period prior to adoption of the financial year combined with the financial year's income is to be aggregated and taxed at the rates prescribed in the Finance Act, which are referenced to the assessment year rather than the financial year.

Zonal committee constitution for write-off of direct tax arrears mandates monthly review meetings and central reporting.
Zonal committees, constituted from Commissioners of Income-tax and Commissioners (Recovery) with temporary additions where vacancies occur, must meet at least monthly to review cases eligible or being processed for write-off or scaling down of direct tax arrears, and to monitor referrals to the Director of Inspection (Recovery); proposals for constitution or reconstitution may be sent to the Board when charges are created, merged or relocated, and the designated Commissioner must send a brief monthly report to the Director of Inspection (Recovery) with a copy to the Board.

Reopening under section 143(2)(b) required where computerized summary assessments selected for sample scrutiny were already completed.
Where a case selected for sample scrutiny has already been assessed under section 143(1) by computer, the proceedings must be reopened under section 143(2)(b) so the case can be placed in scrutiny; this modifies earlier instructions only to that extent and addresses centralised computerized processing that may prevent segregation of returns at the time of August selections.

Approved gratuity fund contributions must be held in post office or scheduled bank accounts or used for LIC group gratuity.
Contributions to approved gratuity funds received on or after the operative date must be deposited in a Post Office Savings Bank account or a current account with a scheduled bank or utilised to make contributions under a Group Gratuity Scheme with the Life Insurance Corporation; investments in other previously permitted investment modes are no longer allowed.

Section 80C deduction extended to payments made up to March thirty-first for National Savings Certificates and similar investments.
Deduction under section 80C is available to assessees for sums paid up to 31 March of the financial year towards purchase of National Savings Certificates and similar investments; Drawing and Disbursing Officers must allow the benefit for payments made after 28 February but on or before 31 March.

Cut-off date for write-off proposals: late submissions returned and recommendations required before year-end.
Only proposals received by DI(R) by the cut-off will be processed for consideration in the same financial year; proposals received after the cut-off will be returned to the concerned Commissioners for resubmission in the next financial year. DI(R) must process proposals received by the cut-off and submit recommendations to the Board by the prescribed submission date. Officers are directed to adhere to and circulate these deadlines to avoid last minute submissions.

Ad-hoc deduction for authorised agents increased and extended to listed securities where no accounts are maintained.
The Board directs that an ad hoc deduction at the rate of 50 per cent of gross commission receipts for expenses be extended to authorised agents of Unit Trust of India and agents selling National Savings Certificates (II, VI and VII Issues), Social Security Certificates and Post Office Time Deposits. The deduction is available only where gross commission earned is less than Rs. 60,000 and no detailed accounts are maintained.

Recognition of public hospital confirms employer reimbursement of employee medical expenses is not treated as taxable perquisite under applicable rules.
Reimbursement by an employer of medical expenses actually incurred in India for treatment in a recognised public hospital is not to be treated as a perquisite for income-tax purposes; for this purpose a recognised public hospital means hospitals recognised under CGHS and CS(MA) Rules for medical treatment and reimbursement under those rules.

Change of jurisdiction under Section 124/127: assessee must be notified promptly by the transferring Income tax Officer.
Change of jurisdiction under Section 124 or Section 127 requires the transferring Income tax Officer to inform the assessee immediately by sending intimation under Certificate of Posting; strict compliance by Field Officers is mandated and failures will be viewed seriously.

Interest under section 216 requires a speaking order stating reasons and prior opportunity to be heard.
Assessing officers must afford the assessee an opportunity of being heard before charging interest under section 216 and must record their findings and reasons in a speaking assessment order so appellate authorities can appreciate the issues.

Appraisal report endorsement requirement limited to major industrial searches; preliminary reporting period extended to seven days.
Appraisal reports from searches are to be endorsed to the Board only in cases involving Large Industrial Houses or where asset seizure exceeds the specified monetary threshold; other references requiring Board transmission are withdrawn. The time for sending the preliminary appraisal report in those cases is extended from three days to seven days after completion of the search, and earlier instructions and manual provisions inconsistent with this change are modified.

Deduction under Section 80C for home loan repayment clarified; officers must verify long term capital gains computations in assessments.
Deduction for repayment of loans for purchase or construction of residential houses/flats is addressed under Section 80C, and an A. D. (M. A. Series) Circular dated 11 February 1987 to authorised dealers in foreign exchange is enclosed. Assessing officers are instructed to check the computations of long term capital gains by such authorised dealers, with attention to paragraphs 5-7 of the circular, and to bring the circular's contents to the notice of all officers handling those assessments.

Reassignment of insurance policies permitted: pending estate duty policies to be handed to insurer or reassigned to assured with notice.
Policies taken for payment of estate duty must be bifurcated into those originally taken and those later assigned to the President; original policies are to be handed to the insurer with a permanent record, while those assigned to the President must be reassigned by the Controller to the assured by execution of proper reassignment instruments and notice to the insurer, with consolidated notices permissible and procedural forms available from the insurer's divisional office.

Personal Deposit Account: seized funds must be deposited only with Board sanction; unauthorised accounts are prohibited.
Money seized during searches and raids must be deposited into a Personal Deposit Account opened only with prior Board sanction; where no such account exists, a formal request must be made to the Board and the account opened only after receiving its approval, because unauthorised current accounts leave transactions outside Government accounts and risk audit criticism.

Returns below taxable limit deemed never furnished; directed not to be acted upon and removed from pendency.
Section 139(10) deems returns showing income below the non-taxable threshold to be never furnished, except where proviso exceptions apply; such returns filed on or after the operative date must not be acted upon, must be publicised as invalid for processing, and must be removed from Monthly Progress Reports and the Income-tax Officer's Control Register (Blue Book).

Cash payment of interest must be by account-payee cheque or draft when deposit-related thresholds are met.
Interest payments that meet the statutory monetary threshold must be made by account payee cheque or account payee bank draft because interest credited on a deposit partakes of the character of a deposit; consequently, repayment of deposit together with any interest reaching the threshold is subject to the same non-cash payment requirement.

Deduction of tax at source applies to lottery and race winnings exceeding exemption threshold, with high-rate withholding on gross winnings.
Winnings from lotteries, crossword puzzles and horse races together with any casual and non-recurring receipts are exempt from TDS where their aggregate does not exceed Rs. 5,000 in a year; payments on or after 1-6-1986 that cause the aggregate to exceed that threshold require tax deduction at source at the rate of forty percent on the gross winnings, treating the exemption amount as protected under section 10(3); gross winnings mean the payment received after deduction of commission agent amounts.

Tax deduction at source from salaries: employers must compute withholding on estimated taxable salary including perquisites and apply prescribed exemptions.
Employers must deduct income-tax at source from salary by computing tax on the employee's estimated annual salary inclusive of monetary pay and prescribed valuation of perquisites, applying exemptions and deductions (including gratuity, leave encashment, retrenchment and approved voluntary retirement payments, house rent allowance, standard deduction and permitted savings deductions) to arrive at taxable income. New procedural provisions allow aggregation of salary from multiple employers, relief for arrears or advances, require allotment and quoting of a tax-deduction account number, and impose interest, rounding rules and penalties for non-compliance; specific valuation rules and evidentiary requirements for allowances and perquisites are prescribed.

Summary Assessment Scheme requires inspections and corrective action where eligible summary assessments are not completed summarily.
Summary Assessment Scheme requires that eligible non-corporate assessments be completed summarily so appeals to the Appellate Assistant Commissioner normally do not arise; where reviews show summary cases were not summarily disposed, appellate records should be scrutinised to identify offending wards or circles, periodic inspections undertaken, disciplinary or corrective action initiated against defaulting officers and supervising Assistant Commissioners, and such actions reported to the Board.

Estate duty cessation for agricultural lands yields exemption for qualifying deaths under the Amendment enacted and published in the Gazette.
The Estate Duty (Amendment) Act, 1986 amends the Estate Duty Act, 1953 so that the Act ceases to apply to agricultural lands situated in the territories comprised in the States of Punjab and Tripura where the property passes on deaths occurring on or after the operative date specified by the Amendment; the Amendment received presidential assent and was published in the Gazette, and earlier circulars set out corresponding dates for other States and Union Territories.