Sections 190-193 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 190 to 193 open Chapter XIII, "Determination of tax in special cases". Section 190 gives relief where total income includes income on which no income-tax is payable. Section 191 deals with the tax on an accumulated provident fund balance. Section 192 taxes the undisclosed income of a block period at 60%. Section 193 sets special rates, 10% and 12.5%, for a resident employee's income from Global Depository Receipts. This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Section 190: relief from income-tax at the average rate on income on which no tax is payable. Section 191: tax on an accumulated recognised provident fund balance is calculated under paragraph 9 of Part A of Schedule XI where paragraph 8 does not apply. Section 192: total undisclosed income of the block period is chargeable at 60%, with any surcharge. Section 193: a resident employee pays 10% on Global Depository Receipt dividend and 12.5% on long-term capital gains, with the rest of total income at rates in force.
Scope
These sections are in Chapter XIII, Part A. The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. Later amendments, rules and notifications should be checked.
Sections 194 to 198, which follow, are covered in their own posts; start with section 194 (special rates). For the Chapter overview, see Chapter XIII of the Income-tax Act, 2025. If you need these special rates reflected in a return, our income tax return filing team can help.
Section 190: income on which no tax is payable
Where the total income of an assessee includes any income on which no income-tax is payable under the Act, the assessee is entitled to a deduction, from the income-tax with which he is chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.
The section does not define the "average rate" or give a figure. It is a deduction from the tax, not from the income, and it is worked out on the amount on which no income-tax is payable. The section prints no rate.
Section 191: accumulated balance of a recognised provident fund
Where the accumulated balance due to an employee participating in a recognised provident fund is included in his total income, owing to the provisions of paragraph 8 of Part A of Schedule XI not being applicable, the Assessing Officer calculates the total of the various sums of tax as per the provisions of paragraph 9 of that Schedule. The method is therefore in Schedule XI, which is the subject of its own article; section 191 only directs the Assessing Officer to it.
Section 192: block assessment in search cases
Section 192(1) and (2)
Irrespective of anything contained in any other provision of the Act, the total undisclosed income of the block period, determined under section 294, is chargeable to tax at the rate of 60%. The tax is increased by a surcharge, if any, levied by any Central Act (sub-section (2)).
The block period and the determination of undisclosed income are in section 294, which is outside the scope of this article. The rate in this section is a fixed rate of 60%.
Section 193: Global Depository Receipts of a resident employee
Section 193(1): who and what
This sub-section applies where the total income of an assessee, being an individual who is a resident and an employee of an Indian company engaged in a specified knowledge based industry or service, or an employee of its subsidiary engaged in such industry or service (the "resident employee"), includes income specified in column B of the Table below. The income-tax payable is the aggregate of income-tax computed at the rate in column C on the corresponding income.
| Serial number | Income | Rate of income-tax payable |
|---|---|---|
| 1 | Income from dividend on Global Depository Receipts of an Indian company engaged in a specified knowledge based industry or service, issued as per such Employees' Stock Option Scheme as the Central Government may, by notification, specify in this behalf and purchased by him in foreign currency | 10% |
| 2 | Income from long-term capital gains arising from the transfer of Global Depository Receipts referred to in serial number 1 | 12.5% |
| 3 | Total income as reduced by income referred to in serial numbers 1 and 2 | Rates in force |
The notified Employees' Stock Option Scheme is not in the text consulted. A footnote mark follows the word "notification" in the Table in the copy, with no note printed; it is not part of the text.
Section 193(2): deductions
Where the gross total income of the resident employee:
- (a) consists only of income by way of dividends in respect of Global Depository Receipts in serial number 1, no deduction is allowed to him under any other provision of the Act; or
- (b) includes any income in serial number 1 or 2, (i) the gross total income is reduced by that income, and (ii) the deduction under any provision of the Act is allowed as if the gross total income so reduced were the gross total income of the assessee.
Section 193(3): section 72(6)
Section 72(6) does not apply for the computation of long-term capital gains arising from the transfer of the long-term capital asset being Global Depository Receipts referred to in serial number 2. Our post on section 72 (capital gains computation) covers that section.
Section 193(4): definitions
| Clause | Term | Meaning |
|---|---|---|
| (a) | "Global Depository Receipts" | any instrument in the form of a depository receipt or certificate (by whatever name called) created by the Overseas Depository Bank outside India or in an International Financial Services Centre and issued to investors against (i) ordinary shares of the issuing company, being a company listed on a recognised stock exchange in India; (ii) foreign currency convertible bonds of the issuing company; or (iii) ordinary shares of the issuing company, being a company incorporated outside India, if the receipt is listed and traded on any International Financial Services Centre |
| (b) | "information technology service" | any service which results from the use of any information technology software over a system of information technology products for realising value addition |
| (c) | "information technology software" | any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing inter-activity to a user, by means of an automatic data processing machine falling under heading information technology products, but not including non-information technology products |
| (d) | "Overseas Depository Bank" | a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company |
| (e) | "specified knowledge based industry or service" | (i) information technology software; (ii) information technology service; (iii) entertainment service; (iv) pharmaceutical industry; (v) bio-technology industry; or (vi) any other industry or service as specified by the Central Government by notification |
| (f) | "subsidiary" | the meaning assigned in section 2(87) of the Companies Act, 2013 (18 of 2013), and includes a subsidiary incorporated outside India |
The Companies Act, 2013 should be checked for the term in clause (f). Any additional industry notified under clause (e)(vi) is not in the text consulted.
A worked example
Names and amounts are invented; the 60%, 10% and 12.5% rates are as printed.
Section 193. Nitya Rao is a resident individual employed by an Indian software company. She holds Global Depository Receipts issued under a notified Employees' Stock Option Scheme and purchased in foreign currency. In the tax year she receives dividend of Rs. 1,00,000 on them and earns long-term capital gains of Rs. 4,00,000 on transferring some, and her other income is Rs. 9,00,000.
- Tax on the dividend at 10%: Rs. 1,00,000 x 10% = Rs. 10,000.
- Tax on the long-term capital gains at 12.5%: Rs. 4,00,000 x 12.5% = Rs. 50,000.
- Total income reduced by these two items: Rs. 9,00,000, taxed at rates in force (the Act prints no figure for these rates).
- Deductions under other provisions are allowed against the reduced gross total income, because her gross total income includes both items (sub-section (2)(b)); the long-term capital gains are computed without section 72(6).
Section 192. If a search leads to a total undisclosed income of Rs. 20,00,000 for the block period, determined under section 294, tax is chargeable at 60%: Rs. 20,00,000 x 60% = Rs. 12,00,000, plus any surcharge levied by a Central Act.
Need help with special-rate income?
Special rates have their own deduction rules, and income on GDRs or in a block period has to be reported and computed separately. Our income tax return filing service can prepare the computation so that each item is taxed at its own rate.
Key takeaways
- Section 190 gives relief at the average rate of income-tax on income on which no income-tax is payable.
- Section 191 refers the tax on an accumulated provident fund balance to paragraph 9 of Part A of Schedule XI.
- Undisclosed income of a block period is chargeable at 60%, plus any surcharge.
- A resident employee pays 10% on GDR dividend and 12.5% on long-term capital gains from GDRs, and the rest of total income at rates in force.
- Section 72(6) does not apply to the GDR capital gains in section 193.
Read next
- Section 194: tax on certain incomes at special rates
- Sections 199 and 201: tax on manufacturing domestic companies
- Sections 187 to 189: prescribed electronic modes of payment
- Section 72: computation of capital gains
- Chapter XIII of the Income-tax Act, 2025
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.