9911796707
TMI BlogThe Structure and Implications of Income Tax Rebates : Clause 155 of the Income Tax Bill, 2025 Vs. Section 87 of the Income-tax Act, 1961.X X X X Extracts X X X X X X X X Extracts X X X X ..... their respective legislative frameworks, reflecting both continuity and evolution in India's approach to tax relief. This commentary provides a detailed analysis of Clause 155 of the Income Tax Bill, 2025, interpreting its provisions, legislative intent, and practical implications. It then undertakes a comprehensive comparative analysis with the existing Section 87 of the Income-tax Act, 1961, examining similarities, differences, and the broader significance of the proposed changes. The analysis concludes with key takeaways and suggestions for future consideration. Objective and Purpose The primary objective of Clause 155 is to provide a statutory mechanism for the allowance of rebates in the computation of income tax, thereby reduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e detailed in that subsequent section. This structure mirrors the approach of delegating the substantive content of rebates to a specific provision. * Scope of Application: The clause applies to "any tax year", making it of general application rather than being limited to specific years or circumstances. Limitation on Quantum of Rebate - Sub-clause (2) provides a ceiling on the aggregate amount of deduction u/s 156. It states that the deduction "shall not, in any case, exceed income-tax (as computed before allowing the deductions under this Chapter) on the total income of the assessee". This ensures: * No Negative Tax: The rebate cannot result in a negative tax liability; the maximum relief is capped at the actual tax computed bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early drafted. * Definition of "Tax Year": The shift from "assessment year" (used in Section 87) to "tax year" may require clarification to avoid interpretative disputes, especially in transitional provisions. * Interaction with Other Reliefs: The clause does not elaborate on how it interacts with other chapters or forms of relief, which may necessitate further guidance or cross-references. Practical Implications The practical impact of Clause 155 will depend on the specific rebates detailed in Section 156. However, some general implications can be identified: * For Taxpayers: Eligible taxpayers will continue to benefit from statutory rebates, reducing their effective tax liability. The clarity and structure of the provision may mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 88E (and formerly to a wider range of sections), whereas Clause 155 generically refers to Section 156. This streamlines the provision and may allow greater flexibility in future amendments. * Legislative Drafting Style: Clause 155 is more concise and general, delegating all operational details to Section 156. Section 87, by contrast, historically listed multiple rebate provisions, leading to frequent amendments as rebate schemes evolved. * Potential for Flexibility: Clause 155's approach may facilitate easier policy changes, as new rebates can be introduced or removed by amending Section 156 alone, without altering the main provision. * Historical Context: Section 87 has undergone numerous amendments, reflecting changing polic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
