Power to make exemption, etc., in relation to participation in business of prospecting for, extraction, etc., of mineral oils

Section 527 — POWER TO MAKE EXEMPTION, ETC., IN RELATION TO PARTICIPATION IN BUSINESS OF PROSPECTING FOR, EXTRACTION, ETC., OF MINERAL OILS

Section 527 of the Income-tax Act, 2025 corresponds to s. 293A of the Income-tax Act, 1961.

STATUTORY ARCHITECTURE

Section 527 empowers the Central Government, if satisfied that it is necessary or expedient in the public interest, to make by notification an exemption, reduction in rate, or other modification of income-tax for classes of persons connected with the business of prospecting for, or extraction or production of, mineral oils. The power extends to the whole or any part of the income of such a class, and to the status in which the class or its members are to be assessed on income from the business referred to in sub-section (2)(a). Every notification must be laid before each House of Parliament.

KEY ELEMENTS

• Sub-section (1) — condition: satisfaction of the Central Government that the notification is necessary or expedient in the public interest.
• Sub-section (1) — content: exemption, reduction in rate, or other modification of income-tax; the text states it is "effective from tax year beginning on or after 1st April, 1992".
• Sub-section (2)(a) — persons with whom the Central Government has entered into agreements for the association or participation of that Government, or of any person authorised by it, in any business of prospecting for or extraction or production of mineral oils.
• Sub-section (2)(b) — persons providing services or facilities or supplying any ship, aircraft, machinery or plant (whether by sale or hire) for such a business carried on by that Government or by any person specified by it by notification.
• Sub-section (2)(c) — employees of persons within clause (a) or (b).
• Sub-section (3) — every notification is to be laid before each House of Parliament.
• Sub-section (4)(a) — "mineral oil" includes petroleum and natural gas.
• Sub-section (4)(b) — "status" means the category of person as defined in s. 2(77) under which the assessee is assessed.

CHANGES FROM THE 1961 ACT

Section 527 corresponds to s. 293A of the 1961 Act. In the 1961 Act, a proviso allowed a notification modifying status to be given effect from an assessment year beginning on or after 1 April 1993; in the 2025 text, the words "effective from tax year beginning on or after 1st April, 1992" are placed at the end of sub-section (1), without a separate proviso. In the 1961 Act the date was confined to notifications modifying status; in the 2025 text the words are not so confined on their face, and the reference is to a tax year beginning on or after 1 April 1992 rather than an assessment year beginning on or after 1 April 1993. "Status" is now defined by reference to s. 2(77), in place of the 1961 wording "individual", "Hindu undivided family" and so on. "Notification in the Official Gazette" becomes "notification"; the Explanation becomes sub-section (4); and in clause (b), "in connection with any business" becomes "for any business".

PRACTITIONER NOTES

• Relief depends on a notification; the section itself grants no exemption.
• Employees qualify only through their employer's falling within clause (a) or (b).
• Clause (b) covers supply by sale or by hire, and extends to businesses carried on by persons specified by the Central Government by notification.

CROSS-REFERENCES

• s. 2(77) — the definition of person categories used for "status".
• Sub-section (2)(a) — the business on whose income status may be modified.
• s. 293A of the 1961 Act — corresponding provision.