Income Tax Bill 2025: New Rules for Transactions in Notified Areas, Highest Tax Rate Applies, Documentation Required

The Income Tax Bill, 2025, introduces special measures for transactions involving parties in notified jurisdictional areas, designated by the Central Government due to inadequate information exchange. Such transactions are treated as international transactions, with all parties deemed associated enterprises. Deductions for payments to financial institutions in these areas require specific authorizations, and other expenditures need prescribed documentation. Unexplained sums received from these areas are considered taxable income. Tax on income from these areas is deducted at the highest applicable rate. The provisions define "person located in a notified jurisdictional area" and clarify terms like "permanent establishment" and "transaction."