Modernizing Definitions of various terms related to Business Income: Clause 66 of the Income Tax Bill, 2025 vs. Section 43 of the Income-tax Act, 1961

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..... rious terms that impact the taxation of business income. Section 43 of the ncome-tax Act, 1961, similarly provides definitions relevant to income from profits and gains of business or profession. This section has been a fundamental part of the tax code, guiding the computation and assessment of business income for decades. A comparison between Clause 66 of the Income Tax Bill, 2025, and Section 43 of the Income-tax Act, 1961, reveals the legislative intent and the evolution of tax law concerning business income. Objective and Purpose The primary objective of Clause 66 in the Income Tax Bill, 2025, is to provide clear definitions for terms used in the computation of business income. These definitions are crucial for ensuring consistency a .....

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..... ildings, and furniture. * Speculative Transaction: Defined as transactions settled otherwise than by actual delivery, with specific exceptions for certain derivative and hedging transactions. Section 43 of the Income-tax Act, 1961 * Actual Cost: The cost of assets to the assessee, adjusted for contributions from other parties, with specific provisions for motor vehicles and non-cash transactions. * Paid: Defined as amounts actually paid or incurred based on the accounting method used for profit computation. * Plant: Similar to the definition in Clause 66, but with historical exclusions for certain agricultural and livestock assets. * Scientific Research: Activities aimed at extending knowledge in natural or applied sciences, with .....

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..... de" in Clause 66 highlights the Bill's focus on contemporary financial instruments and payment methods. These additions address the complexities of modern financial markets and electronic transactions, which were less prevalent when Section 43 was enacted. Conclusion Clause 66 of the Income Tax Bill, 2025, represents a significant step towards modernizing the tax code to reflect current business practices and economic conditions. Its definitions provide clarity and consistency, essential for accurate tax assessments and compliance. The comparison with Section 43 of the Income-tax Act, 1961, underscores the evolution of tax law in response to changing business environments. As businesses continue to evolve, further refinements and upd .....

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