Section 33 — Development rebate

Function in the statutory architecture

Section 33 allowed a development rebate on a new ship or new machinery or plant (other than office appliances or road transport vehicles) owned by the assessee and wholly used for its business, in the year of acquisition or installation or the next year if first used then. The rebate was forty per cent of actual cost for a ship. For machinery or plant it was thirty-five or twenty-five per cent for priority industries listed in the Fifth Schedule, approved hotels and scientific research assets, and twenty or fifteen per cent in other cases, the higher rate applying to installations before 1-4-1970. Sub-section (1A) extended the rebate to certain used ships and machinery at prescribed rates.

Where total income was insufficient, for assets acquired or installed after 31-12-1957 the unabsorbed rebate was carried forward for not more than eight assessment years. No rebate was allowed for machinery or plant installed after 31-3-1965 in office or residential premises, except in approved hotels of Indian companies.

Operative consequences

• The rebate was conditional on the reserve and non-transfer rules in s. 34.
• In amalgamations and in the succession of a firm by a company, the rebate rules carried over to the successor (sub-sections (3) and (4)).
• Sub-section (5) allowed the Central Government to stop the rebate for assets acquired or installed after a notified date at least three years after the notification.

Status

The section remains printed in the 1961 Act but has no new application for AY 2026-27. Its rates and conditions are tied to dates up to 1970 and to a cut-off the Central Government may notify under sub-section (5). The Finance Act, 2026 does not amend this section.

The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject there is no provision in the Income-tax Act, 2025.