Curated commentaries and expert insights on selected statutory provisions,
case laws, and legal developments, offering practical interpretation and context.
Aimed at helping users understand the “why” behind the law, these notes add value beyond the bare text.
Act Rules
Bills
Income Tax Bill 2025 introduces Schedule-XIII replacing Schedule 11 with streamlined luxury goods exclusions
The Income Tax Bill 2025 introduces Schedule-XIII, which replaces Schedule 11 of the Income-tax Act 1961, listing specific articles excluded from certain tax benefits. Both schedules serve to restrict tax incentives for luxury, non-essential, or "sin goods" to channel fiscal benefits toward priority economic sectors. Schedule-XIII contains 15 streamlined items compared to Schedule 11's original 29 items, many of which were later omitted. Key excluded items include alcoholic beverages, tobacco, cosmetics, aerated waters, confectionery, gramophones, projectors, photographic equipment, office machines (excluding computers), steel furniture, safes, and packaging materials. The new schedule integrates explanatory text directly into main provisions rather than using separate footnotes, improving clarity. While maintaining core policy objectives of excluding luxury goods from tax incentives, Schedule-XIII reflects legislative modernization through simplified structure and removal of obsolete items, though some outdated entries like gramophones remain, indicating need for periodic review.
Act Rules
Bills
Income Tax Bill 2025 Schedule-XII mirrors 1961 Act's mineral list for tax deductions
The Income Tax Bill 2025's Schedule-XII and the Income-tax Act 1961's Schedule 07 both enumerate identical lists of 27 minerals and 16 groups of associated minerals eligible for tax benefits related to mineral prospecting, extraction, and processing. Both schedules serve to provide legal certainty regarding which minerals qualify for capital expenditure deductions. The lists include primary ores like iron ore, copper, and gold, alongside strategic minerals such as rare earths, uranium, and thorium. The schedules also recognize associated mineral groups to accommodate multi-mineral mining operations. Minor differences exist only in spelling variations and typographical conventions. The legislative continuity ensures stability for mining industry tax planning while maintaining focus on minerals critical for energy, defense, and technology sectors, though periodic updates may be needed to address emerging mineral classifications.
Act Rules
Bills
Income Tax Bill 2025 Schedule-XI modernizes provident fund regulations while preserving tax incentives and recognition criteria
The Income Tax Bill 2025's Schedule-XI modernizes the regulatory framework for provident, superannuation, and gratuity funds while maintaining core provisions from the Income-tax Act 1961's Schedule 04. The legislation preserves essential tax incentives and recognition criteria, including the 12% employer contribution threshold, five-year service exemption for accumulated balances, and irrevocable trust requirements. Key modernizations include streamlined language, explicit inclusion of capital gains in fund assets, and clarified procedures for funds with employees abroad. The framework continues to exclude funds under the Provident Funds Act 1925 and maintains linkage with the Employees' Provident Funds Act 1952. Recognition conditions remain unchanged, requiring fixed employee contributions, employer contributions not exceeding employee amounts, and strict asset composition rules. Tax treatment provisions are preserved, including retroactive taxation for non-exempt balances and mandatory tax deduction at source. The Board retains rulemaking powers with updated statutory references. Overall, the transition ensures regulatory continuity while addressing operational ambiguities and aligning with contemporary employment practices.
Act Rules
Bills
Income Tax Bill 2025 Schedule-XIV preserves existing insurance taxation framework while updating section references and terminology
The Income Tax Bill 2025's Schedule-XIV largely preserves the existing insurance business taxation framework from the 1961 Act's First Schedule while modernizing terminology and cross-references. Both schedules mandate separate computation of life insurance profits using actuarial valuations and annual averaging of surplus/deficit from inter-valuation periods. For other insurance businesses, profits are computed from statutory profit and loss accounts with specific adjustments for inadmissible expenses, investment gains/losses, and reserves for unexpired risks. The 2025 Bill updates section references for disallowed expenses from sections 30-43B to sections 28-54, potentially broadening the scope of add-backs. Non-resident insurers continue to have profits attributed proportionally based on premium income ratios. Key provisions remain unchanged including cash-basis deductions for certain statutory liabilities and investment-related adjustments. The changes are evolutionary, focusing on legislative modernization rather than substantive reform, though the expanded disallowance sections may impact tax computations requiring careful review by insurers.
Act Rules
Bills
Government gets 3-year power under Clause 535 to resolve Income Tax Bill 2025 implementation difficulties
The Income Tax Bill, 2025 contains Clause 535, a removal of difficulties provision that grants the Central Government power to address implementation issues during the transition from the Income-tax Act, 1961. The clause allows the government to issue orders resolving practical difficulties, provided they remain consistent with the Act's provisions. It specifically enables adaptations for assessments relating to tax years ending March 31, 2026 or earlier. The power is limited to three years from April 1, 2026, and all orders must be laid before Parliament for oversight. This mirrors Section 298 of the 1961 Act, which facilitated the earlier transition from the 1922 Act. Both provisions include similar safeguards: consistency requirements, temporal limitations, and parliamentary scrutiny to prevent executive overreach while ensuring smooth statutory transitions.
Act Rules
Bills
Income Tax Bill 2025 Clause 536 repeals 1961 Act with comprehensive transitional provisions protecting rights and ongoing proceedings
The Income Tax Bill 2025's Clause 536 formally repeals the Income-tax Act 1961 while establishing comprehensive transitional provisions to ensure legal continuity. The clause protects accrued rights, ongoing proceedings, and allows continuation of assessments for tax years beginning before April 1, 2026 under the old Act. Key provisions include carry-forward of losses and tax credits, preservation of elections and declarations, continuation of pending proceedings, and protection of conditional deductions. The clause addresses modern complexities like digital assessment schemes and provides detailed treatment of various loss categories, MAT/AMT credits, and search proceedings. Unlike its predecessor Section 297 of the 1961 Act, Clause 536 is more granular and anticipates wider scenarios, reflecting six decades of tax system evolution and increased administrative sophistication.
Act Rules
Bills
Income Tax Bill 2025 Clause 534 streamlines parliamentary oversight of tax rules and notifications
The Income Tax Bill, 2025 introduces Clause 534 to replace Section 296 of the Income-tax Act, 1961, both governing parliamentary oversight of delegated legislation in tax law. Clause 534 requires the Central Government to lay before Parliament: (a) rules made under the Act, (b) Appellate Tribunal procedural rules under Section 364, and (c) notifications under Sections 263(3), 264, and Chapter XIII-G. These must be laid within thirty days across parliamentary sessions, allowing both Houses to modify or annul them before the following session expires. The provision includes a "without prejudice" clause protecting prior actions. Compared to Section 296, Clause 534 narrows the scope by excluding Settlement Commission and Authority for Advance Rulings procedural rules, while introducing new notification categories. This streamlining reflects institutional changes in the new tax regime while maintaining the constitutional principle of legislative oversight over executive rule-making powers.
Act Rules
Bills
Income Tax Bill 2025 Clause 533 continues CBDT rule-making powers from Section 295 with modernized cross-references
The Income Tax Bill 2025's Clause 533 carries forward the rule-making framework from Section 295 of the Income Tax Act 1961, empowering the Central Board of Direct Taxes to create subordinate legislation for effective tax administration under Central Government control. The provision maintains the four-part structure: general rule-making power, illustrative list of specific matters, estimation methods for income determination, and retrospective effect provisions with taxpayer protection safeguards. While substantially similar to its predecessor, Clause 533 modernizes cross-references to reflect the restructured Act and integrates contemporary administrative needs including digital processes and international compliance. The provision enables administrative flexibility, technical detailing, and policy implementation while maintaining judicial oversight against ultra vires exercise. This framework supports complex tax administration requirements, as exemplified by existing rules like Rule 44G governing Mutual Agreement Procedures under tax treaties, ensuring continuity in India's tax regulatory structure.
Act Rules
Bills
Government gains power to rescind tax exemptions for Union territories under Clause 531 of Income Tax Bill 2025
Clause 531 of the Income Tax Bill, 2025 empowers the Central Government to rescind tax exemptions, rate reductions, or modifications previously granted under Section 294A of the Income-tax Act, 1961 for certain Union territories including Dadra and Nagar Haveli, Goa, Daman and Diu, and Puducherry. While Section 294A was a transitional provision designed to facilitate integration of these territories into India's tax regime with a sunset clause ending March 31, 1967, Clause 531 provides ongoing authority to withdraw these legacy benefits. The provision aims to promote tax uniformity and administrative efficiency by eliminating outdated exemptions. However, it lacks procedural safeguards such as notice requirements or hearing provisions, potentially exposing rescission orders to judicial challenge on grounds of arbitrariness. The clause may also raise concerns regarding compliance with international treaty obligations, particularly the Treaty of Cession with France concerning Puducherry.
Act Rules
Bills
Income Tax Bill 2025 Clause 530 ensures tax continuity when no Central Act charges income tax at year start
The Income Tax Bill 2025's Clause 530 replaces Section 294 of the Income-tax Act 1961, addressing legislative gaps when no Central Act charges income tax at the start of a tax year. Both provisions ensure continuity by deeming either the previous year's tax provisions or those proposed in pending parliamentary bills to be in force, whichever is more favorable to the taxpayer. The clause prevents administrative paralysis and protects taxpayers from retrospective or harsh provisions during interim periods. Key changes include updated terminology from "assessment year" to "tax year" while maintaining identical substantive protections. The provision creates a legal fiction ensuring seamless tax administration until the Finance Act is enacted, incorporating taxpayer-friendly safeguards. Potential ambiguities exist regarding the definition of "more favorable" and application to procedural versus substantive provisions. The clause represents legislative foresight ensuring stability and fairness in tax collection while protecting both revenue interests and taxpayer rights during transitional periods.
Act Rules
Bills
Income Tax Bill 2025 Clause 532 expands government power to create tax administration schemes without sunset provisions
Clause 532 of the Income Tax Bill, 2025 grants the Central Government broad powers to frame schemes for tax administration efficiency, transparency, and accountability. The provision aims to eliminate taxpayer-authority interface through technology and optimize resources via functional specialization. Unlike Section 293D of the 1961 Act, which is limited to approval/registration processes, Clause 532 covers any purpose under the Act without sunset provisions. The government can modify statutory provisions through notifications to implement schemes, subject to parliamentary oversight. The clause includes transitional provisions for existing schemes under the 1961 Act. While promoting digitization and reducing corruption opportunities, concerns exist regarding the breadth of delegated power, absence of temporal limitations, and potential challenges for less technologically literate taxpayers. The provision represents significant expansion of executive scheme-making authority in tax administration.
Act Rules
Bills
Government can withdraw tax approvals under Section 293C and proposed Clause 529 after hearing assessee
The Income Tax Bill 2025's Clause 529 and the current Income-tax Act 1961's Section 293C both empower the Central Government, Board, or income-tax authority to withdraw any statutory approval granted under the Act, even without express withdrawal provisions in the enabling section. Both require recording reasons and providing the assessee a reasonable opportunity to be heard before withdrawal. The key difference lies in procedural language: Section 293C requires "reasonable opportunity of showing cause against the proposed withdrawal" while Clause 529 uses "reasonable opportunity of being heard." This modernized wording in Clause 529 is slightly broader but maintains the same substantive protections. Neither provision imposes time limitations for withdrawal, creating ongoing uncertainty for approval holders. The provisions serve to prevent abuse of statutory approvals while maintaining procedural safeguards consistent with natural justice principles.
Act Rules
Bills
Central Government gets discretionary power to condone delays in tax approvals under Clause 528 and Section 293B
The Central Government or Board has discretionary power to condone delays in obtaining required approvals under both Clause 528 of the Income Tax Bill, 2025 and Section 293B of the Income-tax Act, 1961. Both provisions use nearly identical language, requiring "sufficient cause" for condonation without defining specific criteria. The power applies to all approvals required before specified dates, including exemptions for charitable trusts, corporate restructuring, and tax incentives. While providing administrative flexibility and relief from rigid timelines, the provisions lack procedural guidelines, time limits for seeking condonation, and appeal mechanisms. The discretionary nature requires authorities to exercise judgment based on factors like administrative delays, genuine mistakes, or force majeure events. This mechanism balances procedural compliance with substantive justice, reducing litigation while requiring clear administrative guidelines to prevent inconsistent application and ensure transparency in tax administration.
Act Rules
Bills
Income Tax Bill 2025 Clause 527 gives government discretionary power for mineral oil tax exemptions
The Income Tax Bill 2025's Clause 527 grants the Central Government discretionary power to provide tax exemptions, reductions, or modifications for entities engaged in mineral oil prospecting, extraction, and production. This provision largely mirrors Section 293A of the Income Tax Act 1961, maintaining continuity in India's policy to attract investment in the strategically important energy sector. The clause covers three classes of beneficiaries: entities with government agreements for mineral oil operations, service providers and equipment suppliers, and their employees. Key features include retrospective applicability from April 1992, broad executive discretion based on "public interest," and parliamentary oversight through notification requirements. While the provision offers necessary flexibility for negotiating fiscal terms with investors and responding to market conditions, it raises concerns about transparency and accountability. The subjective "public interest" standard and lack of detailed criteria for granting exemptions could lead to arbitrary application. The retrospective effect and broad discretionary power may create uncertainty for taxpayers despite the provision's importance for energy security and investment attraction.
Act Rules
Bills
Clause 526 Income Tax Bill 2025 bars civil suits challenging tax proceedings, mirrors Section 293 of 1961 Act
Clause 526 of the Income Tax Bill, 2025 mirrors Section 293 of the Income-tax Act, 1961, establishing a comprehensive bar on civil suits challenging tax proceedings or orders. The provision operates through two mechanisms: first, it prohibits civil courts from entertaining suits to set aside or modify any proceeding or order under the Act; second, it provides immunity to the government and its officers for good faith actions taken under the Act. This legislative framework ensures tax disputes are resolved exclusively through specialized appellate mechanisms including the Commissioner (Appeals), Income Tax Appellate Tribunal, and constitutional courts. The bar prevents parallel litigation and maintains the integrity of tax administration, though exceptions exist for ultra vires actions, bad faith conduct, or constitutional violations. The provision requires taxpayers to exhaust statutory remedies while protecting officials from vexatious litigation, ensuring efficient tax enforcement within the specialized framework.
Act Rules
Bills
Income Tax Bill 2025 Clause 525 allows joint search authorizations for multiple persons without creating collective liability
Clause 525 of the Income Tax Bill, 2025 addresses procedural requirements for search and requisition authorizations involving multiple persons, mirroring Section 292CC of the Income Tax Act, 1961. The provision eliminates the need for separate authorizations for each person when conducting searches or requisitions involving multiple individuals. It clarifies that mentioning multiple names in a single authorization does not constitute formation of an association of persons or body of individuals. Despite joint authorization, assessments must be made separately for each named person. This streamlines administrative procedures for tax authorities while protecting taxpayer rights by preventing collective liability based on procedural formality. The provision maintains continuity with existing law, updating only statutory cross-references to sections 247 and 248 from the previous sections 132 and 132A, reflecting the reorganization of the new tax statute while preserving established legal principles.
Act Rules
Bills
Income Tax Bill 2025 Clause 524 creates rebuttable presumptions for assets found during searches including virtual digital assets
The Income Tax Bill 2025's Clause 524 establishes rebuttable presumptions regarding assets, books of account, and documents found during search or survey operations. When items are discovered during searches or surveys, the provision presumes ownership by the person in whose possession they are found, veracity of book contents, authenticity of signatures and handwriting, and due execution of stamped documents. A key expansion from the existing Section 292C of the Income-tax Act 1961 is the explicit inclusion of virtual digital assets alongside traditional items like money, bullion, and jewellery. The provision extends these presumptions to requisitioned materials, treating them as if found during search operations. While structurally similar to Section 292C, Clause 524 modernizes terminology and references updated procedural sections. The presumptions are rebuttable, allowing taxpayers to provide contrary evidence, thus balancing investigative efficiency with taxpayer rights while addressing contemporary economic realities.
Act Rules
Bills
Income Tax Bill 2025 Clause 523 creates legal fiction deeming notices served when assessee participates in proceedings
Clause 523 of the Income Tax Bill, 2025 mirrors Section 292BB of the Income-tax Act, 1961, addressing validity of notices in tax proceedings. The provision creates a legal fiction that any required notice has been duly served when an assessee has appeared in proceedings or cooperated in inquiries relating to assessment or reassessment. This prevents assessees from raising technical objections about non-service, delayed service, or improper service of notices after participating in proceedings. However, an exception preserves the assessee's right to object if raised before completion of assessment or reassessment. The provision aims to prevent assessments from being invalidated on technical grounds while maintaining procedural fairness. It reduces litigation based on procedural technicalities and promotes administrative efficiency, though judicial interpretation has clarified it cannot cure complete absence of jurisdictional notices.
Act Rules
Bills
Income Tax Bill 2025 Clause 522 protects tax documents from invalidation due to minor technical errors
Clause 522 of the Income Tax Bill, 2025 mirrors Section 292B of the Income-tax Act, 1961, providing that tax documents and proceedings shall not be invalidated solely due to mistakes, defects, or omissions, provided they substantially comply with the Act's intent and purpose. The provision covers returns, assessments, notices, summons, and other proceedings, protecting against technical challenges while maintaining substantive requirements. It does not cure jurisdictional errors, violations of natural justice, or substantive non-compliance. The clause aims to prevent miscarriage of justice from procedural technicalities, reduce frivolous litigation, and promote administrative efficiency. Courts have consistently held that minor errors are condoned if essential legal requirements are met, but fundamental defects remain incurable. This provision reinforces the principle that substance should prevail over form in tax administration.
Act Rules
Bills
Income Tax Bill 2025 Clause 521 bars adult tax offenders from probation under new criminal codes
Clause 521 of the Income Tax Bill, 2025 excludes adult tax offenders from probationary relief under the Probation of Offenders Act, 1958 and section 401 of the Bharatiya Nagarik Suraksha Sanhita, 2023, with an exception for persons under eighteen years. This provision updates Section 292A of the Income-tax Act, 1961, which similarly barred probation but referenced the Code of Criminal Procedure, 1973. The legislative intent remains consistent: treating tax offences as serious economic crimes warranting actual punishment rather than conditional discharge. Courts cannot grant probation to adult tax offenders, ensuring uniformity in sentencing and enhancing deterrence. The updated statutory references align with the new criminal procedure code while maintaining the same policy objectives of strict enforcement and revenue protection.
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