Section 294A allowed the Central Government, to avoid hardship or anomaly or remove difficulty arising from the application of the Act to the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, or, for Pondicherry, to implement the Treaty of Cession concluded between France and India on 28 May 1956, to make by general or special order an exemption, reduction in rate or other modification in respect of income-tax or super-tax in favour of any assessee or class of assessees, or for the whole or part of their income.
The proviso states that the power is not exercisable after 31 March 1967, except for the purpose of rescinding an exemption, reduction or modification already made.
Operative consequences
No new exemption, reduction or modification can be made under the section.
An exemption, reduction or modification made earlier can still be rescinded under the section.
Status
Section 294A remains in the Act but is time-limited: the power to grant ended on 31 March 1967, and only the power to rescind continues for assessment year 2026-27. The Finance Act, 2026 did not amend this section.
The 1961 Act governs assessment year 2026-27 and earlier; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 531, which carries forward only the power to rescind.
Function in the statutory architecture
Section 294A allowed the Central Government, to avoid hardship or anomaly or remove difficulty arising from the application of the Act to the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, or, for Pondicherry, to implement the Treaty of Cession concluded between France and India on 28 May 1956, to make by general or special order an exemption, reduction in rate or other modification in respect of income-tax or super-tax in favour of any assessee or class of assessees, or for the whole or part of their income.
The proviso states that the power is not exercisable after 31 March 1967, except for the purpose of rescinding an exemption, reduction or modification already made.
Operative consequences
Status
Section 294A remains in the Act but is time-limited: the power to grant ended on 31 March 1967, and only the power to rescind continues for assessment year 2026-27. The Finance Act, 2026 did not amend this section.
The 1961 Act governs assessment year 2026-27 and earlier; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 531, which carries forward only the power to rescind.