Section 527 — Power to make exemption, etc , in relation to participation in business of prospecting for, extraction, etc , of mineral oils. Successor to s.293A of the 1961 Act.
Section 527 is in Chapter XXIII — Miscellaneous, which runs from section 499 to section 536.
Sub-section (1) gives the Central Government a notification power. If satisfied that it is necessary or expedient in the public interest, it may by notification make an exemption, a reduction in rate, or other modification of income-tax for any class of persons specified in sub-section (2), or in regard to the whole or any part of their income, or in regard to the status in which such persons or their members are to be assessed on income from the business referred to in sub-section (2)(a) — effective from a tax year beginning on or after 1 April 1992.
Sub-section (2) fixes the three classes: persons with whom the Central Government has entered into agreements for the association or participation of that Government, or a person authorised by it, in any business of prospecting for, or extraction or production of, mineral oils; 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 a person specified by it by notification; and employees of persons in either of those two classes.
Sub-section (3) requires every notification issued under the section to be laid before each House of Parliament. Sub-section (4) defines "mineral oil" as including petroleum and natural gas, and "status" as the category of person defined in section 2(77) under which the assessee is assessed.
Production sharing and participation agreements for mineral oils are negotiated by the Central Government with contractors and their service providers, and the tax terms have to be capable of matching what was agreed. The section lets the Government deliver those terms by notification for a defined class, rather than by amending the Act for each arrangement, with the laying requirement as the check.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Earliest effect of a notification | A tax year beginning on or after 1 April 1992 | The exemption, reduction in rate or other modification may be made effective from such a year | Sub-section (1) |
Nothing in the section grants relief by itself: it is a power, and until a notification is issued for a class of persons there is no exemption, reduced rate or modification to claim. What the notification may do is unusually wide — it can go beyond rate and exemption to the status in which the persons or their members are assessed, that is the section 2(77) category, which changes how the income is taxed and not merely how much. The second class in sub-section (2)(b) reaches service providers and suppliers of equipment, including on hire, so contractors down the chain can be covered where the notification says so. "Mineral oil" is defined inclusively as including petroleum and natural gas, and every notification must be laid before both Houses.
You meet it not as a section applied to you but as the authority recited in a notification under which a contractor, a service provider or its employees in a mineral oils business claims an exemption, a reduced rate or a particular status in the return or in an assessment.
it may, by notification, make an exemption, reduction in rate, or other modification of income-tax for any class of persons specified in sub-section (2)
persons providing any services or facilities or supplying any ship, aircraft, machinery or plant (whether by sale or hire) for any business consisting of the prospecting for or extraction or production of mineral oils
See the full 1961 to 2025 concordance.
See the notifications index.
