SCHEDULES XIII TO XVI — SPECIALISED LISTS AND TABLES

SCHEDULE XIII — List of Articles or Things

Schedule XIII — Articles excluded from R&D / Specified Business Deductions

SCHEDULE TEXT

[See section 45(2)]

Schedule XIII enumerates the list of 'undesirable' articles / products excluded from various tax incentives. Items typically include:

1. Beer, wine and other alcoholic spirits.

2. Tobacco and tobacco preparations such as cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco, snuff, and tobacco preparations otherwise.

(Plus other specified items as may be notified.)

OLD ACT (1961) CORRESPONDENCE

Eleventh Schedule of the 1961 Act — read with section 35(2AB) (R&D weighted deduction), section 35AD, section 80-IA / 80-IB and other investment-linked deductions. The Eleventh Schedule has been the 'negative list' for these incentive provisions.

COMMENTARY

Schedule XIII is a 'negative list' Schedule. Many investment-linked tax incentives in the Act (R&D weighted deduction under section 45, specified business deduction under section 46 / formerly s. 35AD, certain s. 80-IA / 80-IB family deductions) are not available to assessees engaged in production / manufacture of articles listed in Schedule XIII.

The policy rationale is straightforward — alcohol, tobacco, and similar 'sin goods' should not benefit from the same tax incentives as legitimate industrial / R&D activity. The Schedule XIII items are primarily alcohol and tobacco products.

Practitioner takeaway. (i) For clients in alcoholic beverages / tobacco / cigarettes / chewing tobacco — verify that any tax incentive claim is consistent with Schedule XIII exclusion. (ii) For clients in adjacent industries (e.g., breweries' ancillary R&D, pharma R&D for tobacco-cessation drugs) — careful drafting and segmental accounting may distinguish eligible activity from excluded. (iii) Track CBDT amendments; periodic additions of items expected based on policy changes.

SCHEDULE XIV — Insurance Business

Schedule XIV — Special Profit Computation for Life / General Insurance Companies

SCHEDULE TEXT

[See section 55]

Schedule XIV implements the long-standing special-computation regime for insurance business. Two Parts:

Part A — Life Insurance Business: Profits and gains from life insurance business shall be computed as: 'actuarial surplus' (excess of life insurance fund's actuarial liabilities over premium reserve), with adjustments. Assessees are LIC, private life insurers (post-2000 reform), and IFSC re-insurers.

Part B — General Insurance Business (Non-life): Profits and gains shall be computed as the balance of profits disclosed by the annual accounts (audited under the Insurance Act) — adjusted for specified items like bonus to participating policyholders, expenses, gains on investments transferred to / from policyholders' account, etc.

OLD ACT (1961) CORRESPONDENCE

First Schedule of the 1961 Act — Insurance Business profits computation. Sections 44-44C of the 1961 Act — special provisions for insurance business. The 5%-actuarial-valuation regime under Rule 2 of First Schedule. Section 33A (post-FA 2010 amendment for specified life insurer profits).

COMMENTARY

Schedule XIV is the operative profit-computation regime for insurance companies. The Indian insurance industry is governed by IRDAI prudential regulations on policyholders' fund / shareholders' fund segregation; Schedule XIV adapts the income-tax computation to this regulatory architecture.

Life insurance computation. Actuarial surplus is the operative profit; assessees use Form 1 of the IRDAI returns to compute. The 5%-of-actuarial-surplus tax rate (post-FA 2010) is governed elsewhere in the Act (rate schedule). Schedule XIV provides the computation, not the rate.

General insurance computation. Adjusted disclosed profit + provisions reversal regime. Non-life insurers (general insurance, health insurance, motor insurance) compute under Part B.

FA 2024 amendments. The post-FA 2024 regime introduced special provisions for IFSC re-insurers — partially exempt under Schedule VI (covered in Volume 2 of Schedules Commentary). Schedule XIV remains the bedrock for non-IFSC insurance companies.

Practitioner takeaway. (i) For insurance clients: integrate IRDAI returns with income-tax computation; coordinate actuarial valuation with Schedule XIV Part A computation. (ii) For shareholders of IFSC re-insurers: the cross-Schedule treatment (Schedule VI for exempt incomes + Schedule XIV for non-exempt) requires careful working. (iii) Continuity of jurisprudence: LIC of India v. CIT (2023) — Schedule XIV's Part A actuarial-surplus methodology — applies. CIT v. New India Assurance Co. (1991) 191 ITR 553 (Bom.) — non-life insurance computation — applies.

SCHEDULE XV — Deduction in respect of Life Insurance Premia, Contributions to Provident Fund, etc.

Schedule XV — The s. 80C List (Investments Eligible for Aggregate Rs 1.5 Lakh Deduction)

SCHEDULE TEXT

[See section 123]

Schedule XV contains the operative list of investments / payments eligible for deduction under section 116 (formerly s. 80C — Rs 1.5 lakh aggregate cap). This is the most-consulted Schedule by individual / HUF assessees. Indicative list (illustrative):

1. Premium paid for life insurance policy on self / spouse / children.

2. Contribution to Statutory PF / RPF / Public Provident Fund (PPF).

3. Subscription to National Savings Certificates (NSC).

4. Subscription to ELSS (Equity-Linked Savings Scheme) of mutual funds.

5. Contribution to Sukanya Samriddhi Yojana (SSY) for daughters.

6. Tuition fees paid to school / college / university for full-time education of two children.

7. Repayment of principal amount of housing loan.

8. Stamp duty / registration fees on purchase of residential property.

9. Subscription to specified post office savings instruments.

10. Contribution to Senior Citizen Savings Scheme (SCSS) — for senior citizen assessees.

11. Subscription to Notified Pension Fund (s. 80CCC integration via Section 117).

12. Other notified categories (Infrastructure Bonds — though largely sunset; specified term deposits with scheduled banks for 5+ years; etc.).

OLD ACT (1961) CORRESPONDENCE

Section 80C of the 1961 Act — detailed list of 21 sub-clauses covering similar items. Rule 11D / 11E for ELSS, SSY etc.

COMMENTARY

Schedule XV is the practical Rs 1.5 lakh investment-deduction list — every salaried employee, every individual taxpayer optimising the old-regime tax computation consults this Schedule annually during return-filing.

Architecture. Section 116 of the new Act is the operative deduction provision (Rs 1.5 lakh aggregate cap); Schedule XV is the eligibility list. Deduction is conditional on (a) actual payment / investment in the tax year; (b) item being on Schedule XV; (c) timely return-filing under section 263(1).

Common items in detail. (a) LIC / private insurance premium — premium-to-sum-assured ratio test under Schedule II Sl. No. 2 governs maturity-side exemption; deduction-side under Schedule XV / s. 116 has its own ratio test (premium ≤ 10% of sum assured for policies post-1-4-2012). (b) PPF — Rs 1.5 lakh annual limit; 15-year lock-in; tax-exempt accretion. (c) ELSS — Rs 1.5 lakh annual investment; 3-year lock-in; tax-exempt under Schedule II for older units / taxable LTCG above Rs 1.25 lakh under section 196 for newer. (d) Tuition fees — only tuition (not development / coaching / hostel); only for two children; only for full-time education in India.

New tax regime (s. 202) caveat. Section 202 default new tax regime largely disallows Schedule XV / section 116 deductions. The deduction is available primarily for assessees opting for old tax regime (via Form 10IE / 10IEA). Run dual computation each year.

Practitioner takeaway. (i) Maintain a Schedule XV checklist for each individual client during return-filing season. (ii) Verify each investment receipt — premium receipt with policy number; PPF passbook entry; ELSS unit allotment letter; tuition fee receipt with student / school identification. (iii) Coordinate with section 116 / s. 124 (NPS — separate Rs 50K under s. 124(1B)) for full Rs 2 lakh maximum personal deduction. (iv) For NRI / OCI clients: certain Schedule XV items (PPF, SSY, SCSS) are not available — check eligibility.

SCHEDULE XVI — Permitted Modes of Investment or Deposits by Registered Non-Profit Organisation

Schedule XVI — Specified Investment Modes for Charitable Trusts (s. 350)

SCHEDULE TEXT

[See section 350]

Schedule XVI implements section 350 (formerly s. 11(5)) of the new Act — the list of permitted forms / modes of investment or deposit for funds of a registered non-profit organisation (charitable trust). Only investments in these modes preserve the trust's exemption under sections 332-339 (formerly ss. 11-13). The list:

1. Government securities.

2. Deposits with scheduled bank / co-operative bank.

3. Investment in immovable property.

4. Deposits / investment in any Public Sector Company (PSU).

5. Investment in bonds / debentures of specified financial institutions.

6. Deposits with Post Office Savings Bank.

7. Units of UTI / specified Mutual Fund (subject to UTI debt-fund classification).

8. Bonds of approved financial corporations (ICICI, HUDCO, NABARD etc.).

9. Debentures of any company / corporation issued under specified terms.

10. Investment in shares of a Public-Sector Company.

11. Specified other modes notified by the Central Government.

OLD ACT (1961) CORRESPONDENCE

Section 11(5) of the 1961 Act — Permitted forms of investment for charitable trusts. Rule 17C of the 1962 Rules — added modes (Greenfield Power Plant Bonds, RuPay Card-related, etc.).

COMMENTARY

Schedule XVI is the gating list for charitable trust investment compliance. Section 338 (formerly s. 13) provides for denial of exemption where the trust's funds are invested otherwise than in Schedule XVI modes. Trustees / directors of charitable trusts must therefore confine investments strictly to the listed categories.

Anti-abuse architecture. The list is exhaustive — investment in non-listed modes (e.g., corporate bonds of unlisted companies, immovable property of related parties, equity of unlisted private companies) forfeits exemption. The 1961-Act jurisprudence on s. 11(5) / s. 13(1)(d) breaches — DIT v. Bharat Diamond Bourse (2003) 259 ITR 280 (SC); Asstt. CIT v. Thanthi Trust (2001) 247 ITR 785 (SC) — applies in full force.

FA 2023 amendment carry-forward. Inter-trust transfers post-FA 2023 — only 85% qualifies as 'application' for exemption purposes; the corresponding investment by the receiving trust must be in Schedule XVI modes.

Practitioner takeaway. (i) For all charitable trust clients: annual investment portfolio audit against Schedule XVI list; engage a portfolio manager familiar with the s. 11(5) regime. (ii) For new trusts: design investment policy aligned with Schedule XVI from inception. (iii) For trustees: personal liability under section 338 read with s. 100 may arise on breach; obtain tax opinion before any non-traditional investment. (iv) Coordinate with Chapter XVII commentary (s. 332-339 trust regime) and Schedule II Sl. No. 14 / Schedule VII (where applicable for the trust).

Schedules XIII-XVI — At a Glance

Practitioner notes

• Schedule XIII: alcohol / tobacco exclusion from R&D and specified business incentives — verify segmental classification.
• Schedule XIV: insurance business profits — actuarial-based for life; adjusted-disclosed for non-life; coordinate with IRDAI returns.
• Schedule XV: the s. 80C / Section 116 investment list — Rs 1.5 lakh aggregate cap; verify each receipt at return-filing.
• Schedule XVI: non-profit investment modes — exhaustive list; non-compliance forfeits trust exemption under s. 338.

CLOSING NOTE — SCHEDULES SERIES (Vols 1-5)

This 5-volume Schedules Commentary covers all 16 Schedules of the Income-tax Act, 2025. The substantive content of every Schedule has been traced to its 1961-Act predecessor (mostly section 10 sub-clauses, Fourth Schedule, First Schedule, Eleventh Schedule, and section 11(5)) and the practical compliance implications spelled out. Used together with the 23-Volume Act Commentary, the 11-Volume Rules Commentary, the Master Cross-Reference document, and the Excel Section Correlation Workbook, this series provides comprehensive coverage of the Act and its Schedules.

Schedules Series Index

— End of Schedules Volume 5 (and Schedules Series) —