Section 66 — Interpretation Part D | ITA 2025

Section 66 is the omnibus interpretation section for Part D — closing-out the PGBP chapter with cross-cutting definitions. It defines 'agreement' (for s. 26(2)(h) tax-deductibility of certain payments), and other technical terms used…

Section 66 — INTERPRETATION (PART D)

Statutory text — Income-tax Act, 2025

Marginal note — Interpretation

For the purposes of Part D of this Chapter,—

(1) “agreement”, for the purposes of section 26(2)(h), includes any arrangement or understanding or action in concert,—

(A) whether or not such arrangement, understanding or action is formal or in writing; or

(B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;

(2) “banking company” means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institu- tion referred to in section 51 of that Act;

(3) “commission or brokerage” shall have the meaning assigned to it in section 402(7); 9[(4) “commodities transactions tax” and “commodity derivative” shall have the same meanings as respectively assigned to them in Chapter VII of the Finance Act, 2013 (17 of 2013);]

(5) “fees for technical services” shall have the meaning assigned to it in section 9(7)(b);

(6) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes;

(7) “Indian Institute of Technology” shall have the same meaning as that of “Institute” defined in section 3(g) of the Institutes of Technology Act, 1961 (59 of 1961);

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 66	INCOME-TAX ACT, 1961
'Agreement' for s. 26(2)(h) — broad inclusion test	1961 s. 40(a)(ii) Explanation / GAAR principle
Other Part-D-wide definitions	1961 ss. 43 / 43A / Explanations

STATUTORY ARCHITECTURE

Section 66 is the closing definition section for Part D (PGBP). Sub-clause (1) — 'agreement' for s. 26(2)(h) is broadly construed to include any arrangement / understanding / action-in-concert, irrespective of legal enforceability. This broad framing aligns with anti-avoidance philosophy: enforceability or formal contract is NOT a precondition for s. 26(2)(h) hit. Practitioners advising on outbound payments should NOT rely on absence-of-formal-contract as a safe harbour.

PLANNING NOTES

(i) For cross-border payments where formal-contract is absent (e.g., spot-market trades, framework MoUs), evaluate s. 26(2)(h) applicability based on substance (action-in-concert / arrangement). (ii) Broad-agreement-definition aligns with GAAR / multi-step-transaction analysis. (iii) Document negotiation trail / email correspondence — these may constitute 'understanding' or 'arrangement' for s. 66(1)(A) purposes.

CROSS-REFERENCES

Section 26(2)(h) — Substantive provision (this section interprets its 'agreement').
Chapter XI — GAAR (parallel anti-avoidance machinery).
Section 162-167 — Transfer Pricing (related concept of arrangement).

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