Book: Understanding Income Tax Bill, 2025 with Notes on Clauses

by CA. Arvind Tuli

Publisher: Bharat Law House Pvt. Ltd.

Book title: Understanding Income Tax Bill, 2025 with Notes on Clauses

1st Edition, 2025

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About the Book

Comparative Table 1 – Income Tax Act = Income Tax Bill

Comparative Table 2 – Income Tax Bill = Income Tax Act

Income Tax Bill, 2025

CHAPTER I – PRELIMINARY

1. Short title, extent and commencement

2. Definitions

3. Definition of “tax year”

4. Charge of income-tax

5. Scope of total income

6. Residence in India

CHAPTER II – BASIS OF CHARGE

7. Income deemed to be received

8. Income on receipt of capital asset or stock-in-trade by specified person from specified entity

9. Income deemed to accrue or arise in India

10. Apportionment of income between spouses governed by Portuguese Civil Code

CHAPTER III – INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

A. Incomes not to be included in total income

11. Incomes not included in total income

B.—Incomes not to be included in total income of political parties and electoral trusts

12. Incomes not included in total income of political parties and electoral trusts

CHAPTER IV – COMPUTATION OF TOTAL INCOME

A. Heads of income

13. Heads of income

14. Income not forming part of total income and expenditure in relation to such income

15. Salaries

16. Income from salary

17. Perquisite

18. Profits in lieu of salary

B. Salaries

19. Deductions from salaries

C. Income from house property

20. Income from house property

21. Determination of annual value

22. Deductions from income from house property

23. Arrears of rent and unrealised rent received subsequently

24. Property owned by co-owners

25. Interpretation

D. Profits and gains of business or profession

26. Income under head “Profits and gains of business or profession”

27. Manner of computing profits and gains of business or profession

28. Rent, rates, taxes, repairs and insurance

29. Deductions related to employee welfare

30. Deduction on certain premium

31. Deduction for bad debt and provision for bad and doubtful debt

32. Other deductions

33. Deduction for depreciation

34. General conditions for allowable deductions

35. Amounts not deductible in certain circumstances

36. Expenses or payments not deductible in certain circumstances

37. Certain deductions allowed on actual payment basis only

38. Certain sums deemed as profits and gains of business or profession

39. Computation of actual cost

40. Special provision for computation of cost of acquisition of certain assets

41. Written down value of depreciable asset

42. Capitalising the impact of foreign exchange fluctuation

43. Taxation of foreign exchange fluctuation

44. Amortisation of certain preliminary expenses

45. Expenditure on scientific research

46. Capital expenditure of specified business

47. Expenditure on agricultural extension project and skill development project

48. Tea development account, coffee development account and rubber development account

49. Site Restoration Fund

50. Special provision in the case of trade, profession or similar association

51. Amortisation of expenditure for prospecting certain minerals

52. Amortisation of expenditure for telecommunications services, amalgamation, demerger, scheme of voluntary retirement, etc.

53. Full value of consideration for transfer of assets other than capital assets in certain cases

54. Business of prospecting for mineral oils

55. Insurance business

56. Special provision in case of interest income of specified financial institutions

57. Revenue recognition for construction and service contracts

58. Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents

59. Chargeability of royalty and fee for technical services in hands of non-residents

60. Deduction of head office expenditure in case of non-residents

61. Special provision for computation of income on presumptive basis in respect of certain business activities of certain non-residents

62. Maintenance of books of account

63. Tax audit

64. Facilitating payments in electronic modes

65. Special provision for computing deductions in case of business reorganisation of co-operative banks

66. Interpretation

E. Capital gains

67. Capital gains

68. Capital gains on distribution of assets by companies in liquidation

69. Capital gains on purchase by company of its own shares or other specified securities

70. Transactions not regarded as transfer

71. Withdrawal of exemption in certain cases

72. Mode of computation of capital gains

73. Cost with reference to certain modes of acquisition

74. Special provision for computation of capital gains in case of depreciable assets

75. Special provision for cost of acquisition in case of depreciable asset

76. Special provision for computation of capital gains in case of Market Linked Debenture

77. Special provision for computation of capital gains in case of slump sale

78. Special provision for full value of consideration in certain cases

79. Special provision for full value of consideration for transfer of share other than quoted share

80. Fair market value deemed to be full value of consideration in certain cases

81. Advance money received

82. Profit on sale of property used for residence

83. Capital gains on transfer of land used for agricultural purposes not to be charged in certain cases

84. Capital gains on compulsory acquisition of lands and buildings not to be charged in certain cases

85. Capital gains not to be charged on investment in certain bonds

86. Capital gains on transfer of certain capital assets not to be charged in case of investment in residential house

87. Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area

88. Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area to any Special Economic Zone

89. Extension of time for acquiring new asset or depositing or investing amount of capital gains

90. Meaning of “adjusted”, “cost of improvement” and “cost of acquisition”

91. Reference to Valuation Officer

F. Income from other sources

92. Income from other sources

93. Deductions

94. Amounts not deductible

95. Profits chargeable to tax

CHAPTER V – INCOME OF OTHER PERSONS, INCLUDED IN TOTAL INCOME OF ASSESSEE

96. Transfer of income without transfer of assets

97. Chargeability of income in transfer of assets

98. “Transfer” and “revocable transfer” defined

99. Income of individual to include income of spouse, minor child, etc.

100. Liability of person in respect of income included in income of another person

101. Total income

CHAPTER VI – AGGREGATION OF INCOME

102. Unexplained credits

103. Unexplained investment

104. Unexplained asset

105. Unexplained expenditure

106. Amount borrowed or repaid through negotiable instrument, hundi, etc.

107. Charge of tax

CHAPTER VII – SET OFF, OR CARRY FORWARD AND SET OFF OF LOSSES

108. Set off of losses under the same head of income

109. Set off of losses under any other head of income

110. Carry forward and set off of loss from house property

111. Carry forward and set off of loss from capital gains

112. Carry forward and set off of business loss

113. Set off and carry forward of losses from speculation business

114. Set off and carry forward of losses from specified business

115. Set off and carry forward of losses from specified activity

116. Treatment of accumulated losses and unabsorbed depreciation in amalgamation or demerger, etc.

117. Treatment of accumulated losses and unabsorbed depreciation in scheme of amalgamation in certain cases

118. Carry forward and set off of losses and unabsorbed depreciation in business reorganisation of co-operative banks

119. Carry forward and set off of losses not permissible in certain cases

120. No set off of losses against undisclosed income consequent to search, requisition and survey

121. Submission of return for losses

CHAPTER VIII – DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME

A. General

122. Deductions to be made in computing total income

B. Deductions in respect of certain payments

123. Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.

124. Deduction in respect of employer contribution to pension scheme of Central Government

125. Deduction in respect of contribution to Agnipath Scheme

126. Deduction in respect of health insurance premia

127. Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability

128. Deduction in respect of medical treatment, etc.

129. Deduction in respect of interest on loan taken for higher education

130. Deduction in respect of interest on loan taken for residential house property

131. Deduction in respect of interest on loan taken for certain house property

132. Deduction in respect of purchase of electric vehicle

133. Deduction in respect of donations to certain funds, charitable institutions, etc.

134. Deductions in respect of rents paid

135. Deduction in respect of certain donations for scientific research or rural development

136. Deduction in respect of contributions given by companies to political parties

137. Deduction in respect of contributions given by any person to political parties

C. Deductions in respect of certain incomes

138. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.

139. Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone

140. Special provision in respect of specified business

141. Deduction in respect of profits and gains from certain industrial undertakings

142. Deductions in respect of profits and gains from housing projects

143. Special provisions in respect of certain undertakings in North-Eastern States

144. Special provisions in respect of newly established Units in Special Economic Zones

145. Deduction for businesses engaged in collecting and processing of bio-degradable waste

146. Deduction in respect of additional employee cost

147. Deductions for income of Offshore Banking Units and Units of International Financial Services Centre

148. Deduction in respect of certain inter-corporate dividends

149. Deduction in respect of income of co-operative societies

150. Deduction in respect of certain income of Producer Companies

151. Deduction in respect of royalty income, etc., of authors of certain books other than text-books

152. Deduction in respect of royalty on patents

D. Deductions in respect of other incomes

153. Deduction for interest on deposits

E. Other deductions

154. Deduction in case of a person with disability

CHAPTER IX – REBATES AND RELIEFS

A. Rebates and reliefs

155. Rebate to be allowed in computing income-tax

156. Rebate of income-tax in case of certain individuals

157. Relief when salary, etc., is paid in arrears or in advance

158. Relief from taxation in income from retirement benefit account maintained in a notified country

B. Double taxation relief

159. Agreement with foreign countries or specified territories and adoption by Central Government of agreement between specified associations for double taxation relief

160. Countries with which no agreement exists

CHAPTER X – SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX

161. Computation of income from international transaction and specified domestic transaction having regard to arm’s length price

162. Meaning of associated enterprise

163. Meaning of international transaction

164. Meaning of specified domestic transaction

165. Determination of arm’s length price

166. Reference to Transfer Pricing Officer

167. Power of Board to make safe harbour rules

168. Advance pricing agreement

169. Effect to advance pricing agreement

170. Secondary adjustment in certain cases

171. Maintenance, keeping and furnishing of information and document by certain persons

172. Report from an accountant to be furnished by persons entering into international transaction or specified domestic transaction

173. Definitions of certain terms relevant to determination of arm’s length price, etc.

174. Avoidance of income-tax by transactions resulting in transfer of income to non-residents

175. Avoidance of tax by certain transactions in securities

176. Special measures in respect of transactions with persons located in notified jurisdictional area

177. Limitation on interest deduction in certain cases

CHAPTER XI – GENERAL ANTI-AVOIDANCE RULE

178. Applicability of General Anti-Avoidance Rule

179. Impermissible avoidance arrangement

180. Arrangement to lack commercial substance

181. Consequences of impermissible avoidance arrangement

182. Treatment of connected person and accommodating party

183. Application of this Chapter

184. Interpretation

CHAPTER XII – MODE OF PAYMENT IN CERTAIN CASES, ETC.

185. Mode of taking or accepting certain loans, deposits and specified sum

186. Mode of undertaking transactions

187. Acceptance of payment through prescribed electronic modes

188. Mode of repayment of certain loans or deposits

189. Interpretation

CHAPTER XIII – DETERMINATION OF TAX IN SPECIAL CASES

A. Determination of tax in certain special cases

190. Determination of tax where total income includes income on which no tax is payable

191. Tax on accumulated balance of recognised provident fund

192. Tax in case of block assessment of search cases

193. Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer

194. Tax on certain incomes

195. Tax on income referred to in section 102 or 103 or 104 or 105 or 106

B. Special provisions relating to tax on capital gains

196. Tax on short-term capital gains in certain cases

197. Tax on long-term capital gains

198. Tax on long-term capital gains in certain cases

C. New tax regime

199. Tax on income of certain manufacturing domestic companies

200. Tax on income of certain domestic companies

201. Tax on income of new manufacturing domestic companies

202. New tax regime for individuals, Hindu undivided family and others

203. Tax on income of certain resident co-operative societies

204. Tax on income of certain new manufacturing co-operative societies

205. Conditions for tax on income of certain companies and cooperative societies

D. Special provisions relating to minimum alternate tax and alternate minimum tax

206. Special provision for minimum alternate tax and alternate minimum tax

E. Special provisions relating to non-residents and foreign company

207. Tax on dividends, royalty and technical service fees in case of foreign companies

208. Tax on income from units purchased in foreign currency or capital gains arising from their transfer

209. Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer

210. Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer

211. Tax on non-resident sportsmen or sports associations

212. Interpretation

213. Special provision for computation of total income of non-residents

214. Tax on investment income and long-term capital gains

215. Capital gains on transfer of foreign exchange assets not to be charged in certain cases

216. Return of income not to be furnished in certain cases

217. Benefit to be available in certain cases even after assessee becomes resident

218. Provisions not to apply if the assessee so chooses

219. Conversion of an Indian branch of foreign company into subsidiary Indian company

220. Foreign company said to be resident in India

F. Special provisions relating to pass-through entities

221. Tax on income from securitisation trusts

222. Tax on income in case of venture capital undertakings

223. Tax on income of unit holder and business trust

224. Tax on income of investment fund and its unit holders

G. Special provisions relating to income of shipping companies

225. Income from the business of operating qualifying ships

226. Tonnage tax scheme

227. Computation of tonnage income

228. Relevant shipping income and exclusion from book profit

229. Depreciation and gains relating to tonnage tax assets

230. Exclusion of deduction, loss, set off, etc.

231. Method of opting of tonnage tax scheme and validity

232. Certain conditions for applicability of tonnage tax scheme

233. Amalgamation and demerger

234. Avoidance of tax and exclusion from tonnage tax scheme

235. Interpretation

CHAPTER XIV – TAX ADMINISTRATION

A. Authorities, jurisdiction and functions

236. Income-tax authorities

237. Appointment of income-tax authorities

238. Control of income-tax authorities

239. Instructions to subordinate authorities

240. Taxpayer’s Charter

241. Jurisdiction of income-tax authorities

242. Jurisdiction of Assessing Officers

243. Power to transfer cases

244. Change of incumbent of an office

245. Faceless jurisdiction of income-tax authorities

B. Powers

246. Power regarding discovery, production of evidence, etc.

247. Search and seizure

248. Powers to requisition

249. Reasons not to be disclosed

250. Application of seized or requisitioned assets

251. Copying, extraction, retention and release of books of account and documents seized or requisitioned

252. Power to call for information

253. Powers of survey

254. Power to collect certain information

255. Power to inspect registers of companies

256. Power of competent authority

257. Proceedings before income-tax authorities to be judicial proceedings

258. Disclosure of information relating to assessees

259. Power to call for information by prescribed income-tax authority

260. Faceless collection of information

261. Interpretation

CHAPTER XV – RETURN OF INCOME

A. Allotment of Permanent Account Number

262. Permanent Account Number

B. Filing of return of income and processing

263. Return of income

264. Scheme for submission of returns through tax return preparers

265. Return by whom to be verified

266. Self-assessment

267. Tax on updated return

CHAPTER XVI – PROCEDURE FOR ASSESSMENT

A. Procedure for assessment

268. Inquiry before assessment

269. Estimation of value of assets by Valuation Officer

270. Assessment

271. Best judgment assessment

272. Power of Joint Commissioner to issue directions in certain cases

273. Faceless Assessment

274. Reference to Principal Commissioner or Commissioner in certain cases

275. Reference to Dispute Resolution Panel

276. Method of accounting

277. Method of accounting in certain cases

278. Taxability of certain income

279. Income escaping assessment

280. Issue of notice

281. Procedure before issuance of notice under section 280

282. Time limit for notices under sections 280 and 281

283. Provision for cases where assessment is in pursuance of an order on appeal, etc.

284. Sanction for issue of notice

285. Other provisions

286. Time limit for completion of assessment, reassessment and recomputation

287. Rectification of mistake

288. Other amendments

289. Notice of demand

290. Modification and revision of notice in certain cases

291. Intimation of loss

B. Special procedure for assessment of search cases

292. Assessment of income pertaining to the block period

293. Computation of total income of block period

294. Procedure for block assessment

295. Undisclosed income of any other person

296. Time-limit for completion of block assessment

297. Certain interests and penalties not to be levied or imposed

298. Levy of interest and penalty in certain cases

299. Authority competent to make assessment of block period

300. Application of other provisions of Act

301. Interpretation

CHAPTER XVII – SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS

A. Association of persons, firm, Hindu undivided family, etc.

1. Legal representatives

302. Legal representative

2. Representative assesses — General provisions

303. Representative assessee

304. Liability of representative assessee

305. Right of representative assessee to recover tax paid

3. Representative assesses — Special cases

306. Who may be regarded as agent

307. Charge of tax where share of beneficiaries unknown

308. Charge of tax in case of oral trust

4. Association of persons and body of individuals

309. Method of computing a member’s share in income of association of persons or body of individuals

310. Share of member of an association of persons or body of individuals in income of association or body

311. Charge of tax where shares of members in association of persons or body of individuals unknown, etc.

5. Executors

312. Executor

6. Succession to business or profession

313. Succession to business or profession otherwise than on death

314. Effect of order of tribunal or court in respect of business reorganisation

7. Partition

315. Assessment after partition of a Hindu undivided family

8. Profits of non-residents from occasional shipping business

316. Shipping business of non-residents

9. Persons leaving India

317. Assessment of persons leaving India

10. Association of persons or body of individuals or artificial 

juridical person formed for a particular event or purpose

318. Assessment of association of persons or body of individuals or artificial juridical person formed for a particular event or purpose

11. Persons trying to alienate their assets

319. Assessment of persons likely to transfer property to avoid tax

12. Discontinuance of business, or dissolution

320. Discontinued business

321. Association dissolved or business discontinued

322. Company in liquidation

13. Private companies

323. Liability of directors of private company

14. Assessment of firms

324. Charge of tax in case of a firm

325. Assessment as a Firm

326. Assessment when section 325 not complied with

15. Change in constitution, succession and dissolution

327. Change in constitution of a firm

328. Succession of one firm by another firm

329. Joint and several liability of partners for tax payable by firm

330. Firm dissolved or business discontinued

16. Liability of partners of limited liability partnership in liquidation

331. Liability of partners of limited liability partnership in liquidation

B. Special Provisions for Registered non-profit organisation

1. Registration

332. Application for registration

333. Switching over of regimes

2. Income of registered non-profit organization

334. Tax on income of registered non-profit organization

335. Regular income

336. Taxable regular income

337. Specified income

338. Income not to be included in regular income

339. Corpus donation

340. Deemed corpus donation

341. Application of income

342. Accumulated income

343. Deemed accumulated income

3. Commercial activities by registered non-profit organization

344. Business undertaking held as property

345. Restriction on commercial activities by a registered non-profit organisation

346. Restriction on commercial activities by registered non-profit organisation carrying out advancement of any other object of general public utility

4. Compliances

347. Books of account

348. Audit

349. Return of income

350. Permitted modes of investment

5. Violations

351. Specified violation

352. Tax on accreted income

353. Other violations

6. Approval for purpose of deduction under section 133(1)(b)(ii)

354. Application for approval for purpose of section 133(1)(b)(ii)

7. Interpretation

355. Interpretation

CHAPTER XVIII APPEALS, REVISION AND ALTERNATE DISPUTE RESOLUTIONS

A. Appeals

1. Appeals to Joint Commissioner (Appeals) and Commissioner (Appeals)

356. Appealable orders before Joint Commissioner (Appeals)

357. Appealable orders before Commissioner (Appeals)

358. Form of appeal and limitation

359. Procedure in appeal

360. Powers of Joint Commissioner (Appeals) or Commissioner (Appeals)

2. Appeals to Appellate Tribunal

361. Appellate Tribunal

362. Appeals to Appellate Tribunal

363. Orders of Appellate Tribunal

364. Procedure of Appellate Tribunal

3. Appeals to High Court

365. Appeal to High Court

366. Case before High Court to be heard by not less than two Judges

4. Appeals to Supreme Court

367. Appeal to Supreme Court

368. Hearing before Supreme Court

5. General

369. Tax to be paid irrespective of appeal, etc.

370. Execution for costs awarded by Supreme Court

371. Amendment of assessment on appeal

372. Exclusion of time taken for copy

373. Filing of appeal by income-tax authority

374. Interpretation of “High Court”

B. Special provisions for avoiding repetitive appeals

375. Procedure when assessee claims identical question of law is pending before High Court or Supreme Court

376. Procedure where an identical question of law is pending before High Courts or Supreme Court

C. Revision by the Principal Commissioner or Commissioner

377. Revision of orders prejudicial to revenue

378. Revision of other orders

D. Alternate dispute resolutions

1. Dispute Resolution Committee in certain cases

379. Dispute Resolution Committee

2. Advance rulings

380. Interpretation

381. Board for Advance Rulings

382. Vacancies, etc., not to invalidate proceedings

383. Application for advance ruling

384. Procedure on receipt of application

385. Appellate authority not to proceed in certain cases

386. Advance ruling to be void in certain circumstances

387. Powers of the Board for Advance Rulings

388. Procedure of Board for Advance Rulings

389. Appeal

CHAPTER XIX COLLECTION AND RECOVERY OF TAX

A. General

390. Deduction or collection at source and advance payment

391. Direct payment

B. Deduction and collection at source

392. Salary and accumulated balance due to an employee

393. Tax to be deducted at source

394. Collection of tax at source

395. Certificates

396. Tax deducted is income received

397. Compliance and reporting

398. Consequences of failure to deduct or pay or, collect or pay

399. Processing

400. Power of Central Government to relax provisions of this Chapter

401. Bar against direct demand on assessee

402. Interpretation

C. Advance payment of tax

403. Liability for payment of advance tax

404. Conditions of liability to pay advance tax

405. Computation of advance tax

406. Payment of advance tax by assessee on his own accord

407. Payment of advance tax by assessee in pursuance of order of Assessing Officer

408. Instalments of advance tax and due dates

409. When assessee is deemed to be in default

410. Credit for advance tax

D. Collection and recovery

411. When tax payable and when assessee deemed in default

412. Penalty payable when tax in default

413. Certificate by Tax Recovery Officer and Validity thereof

414. Tax Recovery Officer by whom recovery is to be effected

415. Stay of proceedings in pursuance of certificate and amendment or cancellation thereof

416. Other modes of recovery

417. Recovery through State Government

418. Recovery of tax in pursuance of agreements with foreign countries

419. Recovery of penalties, fine, interest and other sums

420. Tax clearance certificate

421. Recovery by suit or under other law not affected

422. Recovery of tax arrear in respect of non-resident from his assets

E. Interest chargeable in certain cases

423. Interest for defaults in furnishing return of income

424. Interest for defaults in payment of advance tax

425. Interest for deferment of advance tax

426. Interest on excess refund

F. Levy of fee in certain cases

427. Fee for default in furnishing statements

428. Fee for default in furnishing return of in

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Book: Handbook On Tax Deduction At Source