Rule making powers under The Income Tax- Act of 2025 and 1961 analysed and discussed.

ITA 2025

ITA 1961

Observations and

533. Power to make rules.

295. Power to make rules.

remarks by learned author.

(1) The Board may, subject to the control of the Central Government, by notification, make rules for carrying out the purposes of this Act.

295. (1) The Board may, subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act.

In ITA 2025 words used are 'by notification' whereas in ITA 1961 'notification in the Gazette of India'.

{Remarks - this is general and overall power in both}

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters:-

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters :-

Specific purposes are given in sub-sections below.

(a) the ascertainment and determination of any class of income;

(a) the ascertainment and determination of any class of income;

Same- any class of income

(b) the manner in which and the procedure by which the income shall be arrived at in the case of-

(b) the manner in which and the procedure by which the income shall be arrived at in the case of-

In its subclauses determination of some specific type of income are provided

(i) income derived in part from agriculture and in part from business;

(i) income derived in part from agriculture and in part from business;

This relates to income from composite agriculture and business income like in case of tea, coffee, and rubber and also purely agricultural income. Rules are provided.

(ii) persons residing outside India;

(ii) persons residing outside India;

Same

(iii) operations carried out in India by a non-resident;

(iia) operations carried out in India by a non-resident;

same

(iv) transactions or activities of a non-resident;

(iib) transactions or activities of a non-resident;

same

(v) an individual who is liable to be assessed under section 99(3) and (4);

(iii) an individual who is liable to be assessed under the provisions of sub-section (2) of section 64;

Similar about clubbing of income.

(c) the determination of the value of any perquisite chargeable to tax under this Act in such manner and on such basis as appears to the Board to be proper and reasonable;

(c) the determination of the value of any perquisite chargeable to tax under this Act in such manner and on such basis as appears to the Board to be proper and reasonable;

Similar - is about perquisites in case of salaries persons.

The power is wider and can include perquisites in other cases also

(d) the percentage on the written down value which may be allowed as depreciation for buildings, machinery, plant or furniture;

(d) the percentage on the written down value which may be allowed as depreciation in respect of buildings, machinery, plant or furniture;

Similar in both.

There is no mention about : a. intangible assets and

b. depreciation to be allowed on actual cost.

The question which can arise is whether Rules which prescribes rate for them are within power?

(e) the matters specified in section 62;

Note - It relates to Maintenance of books of account.

(dda) the matters specified in sub-sections (2) and (3) of section 44AA;]

(dd) the extent to which, and the conditions subject to which, any expenditure referred to in sub-section (3) of section 37 may be allowed;]

Note Sub-section (3) was omitted was by Act 26 of 1997, s. 8 (w.e.f. 1-4-1998).

Comparative provision for clause (e) is vide S.44AA and

(f) the conditions or limitations subject to which any payment of rent made by an assessee shall be deducted under section 134;

(e) the conditions or limitations subject to which any payment of rent made by an assessee shall be deducted under section 80GG;

Rent paid for own residence

On same lines and effect.

(g) the matters specified in Chapter XI;

Note- about GENERAL ANTI-AVOIDANCE RULE. S. 178 -184

(ee) the matters specified in Chapter X-A;

Note- GENERAL ANTI-AVOIDANCE RULE. S.95 to 102

Seems on same line and effect, changes are in style of drafting.

Just going by heading of sections it is noticed that S100 of ITA 1961 having heading framing of guidelines, is not separately found in index of sections in ITA 2025. All other sections in ITA 2025 in this Chapter have similar headings.

(h) the time within which any person may apply for the allotment of a Permanent Account Number, the form and the manner in which such application may be made and the particulars which such application shall contain and the transactions with respect to which Permanent Account Number shall be quoted on documents relating to such transactions under section 262;

(eea) the cases, the nature and value of assets, the limits and heads of expenditure and the outgoings, which are required to be prescribed under sub-section (6) of section 139;

(eeb) the time within which any person may apply for the allotment of a permanent account number, the form and the manner in which such application may be made and the particulars which such application shall contain and the transactions with respect to which permanent account numbers shall be quoted on documents relating to such transactions under section 139A;

About application, allotment and usages of permanent account number (PAN).

Headings of section is similar in both except style.

(i) the documents, statements, receipts, certificates or audited reports which may not be furnished along with the return but shall be produced before the Assessing Officer on demand under section 263(2)(a);

(eeba) the documents, statements, receipts, certificates or audited reports which may not be furnished along with the return but shall be produced before the Assessing Officer on demand under section 139C;

Similar except numbers of sections and style of presentation.

(j) the class or classes of persons who shall be required to furnish the return of income in electronic form; the form and the manner of furnishing the said return in electronic form; documents, statements, receipts, certificates or reports which shall not be furnished with the return in electronic form and the computer resource or electronic record to which such return may be transmitted under section 263(2)(a);

(eebb) the class or classes of persons who shall be required to furnish the return of income in electronic form; the form and the manner of furnishing the said return in electronic form; documents, statements, receipts, certificates or reports which shall not be furnished with the return in electronic form and the computer resource or electronic record to which such return may be transmitted under section 139D;

Returns to be furnished in electronic form compulsorily and option for physical returns.

Similar and same effect just style of drafting changed.

(k) the cases, the nature and value of assets, the limits and heads of expenditure and the outgoings, which are required to be prescribed under section 263(2)(b);

Covered in S.139 and 139D

(l) the form of the report of audit or inventory valuation and the particulars which such report shall contain under section 268(5);

(eec) the form of the report of audit or inventory valuation and the particulars which such report shall contain under sub-section (2A) of section 142;

About reports contents and forms when a audit or reference to DVO is ordered for assessment purposes.

(m) remuneration of Chairperson and members of the Approving Panel under section 274(21) and procedure and manner for constitution of, functioning and disposal of references by, the Approving Panel under section 274(24);

(eed) remuneration of Chairperson and members of the Approving Panel under sub-section (18) and procedure and manner for constitution of, functioning and disposal of references by, the Approving Panel under sub-section (21) of section 144BA;

On similar lines

(n) the form and manner in which the information relating to payment of any sum may be furnished under section 397(3)(d);

(fa) the form and manner in which the information relating to payment of any sum may be furnished under sub-section (6) of section 195;

(o) the authority to be prescribed for any of the purposes of this Act;

(g) the authority to be prescribed for any of the purposes of this Act;

(p) the procedure for giving effect to any agreement for the granting of relief in respect of double taxation or for the avoidance of double taxation entered into by the Central Government under this Act;

19[(ha) the procedure for granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act;]

(q) the procedure for granting of relief or deduction, of any income-tax paid in any country or specified territory outside India, under section 159 or 160, against the income-tax payable under this Act;

(h) the procedure for giving effect to the terms of any agreement for the granting of relief in respect of double taxation or for the avoidance of double taxation which may be entered into by the Central Government under this Act;

(r) the form and manner in which any application, claim, return or information may be made or furnished and the fees that may be levied in respect of any application or claim;

(i) the form and manner in which any application, claim, return or information may be made or furnished and the fees that may be levied in respect of any application or claim;

(s) the manner in which any document required to be filed under this Act may be verified;

(j) the manner in which any document required to be filed under this Act may be verified;

(t) the procedure to be followed on applications for refunds;

(k) the procedure to be followed on applications for refunds;

(u) the procedure for calculating interest payable by assessees or by the Government to assessees under this Act, including the rounding off of periods when a fraction of a month is involved, and specifying the circumstances under which and the extent to which petty amounts of interest payable by assessees may be ignored;

7[(kk) the procedure to be followed in calculating interest payable by assessees or interest payable by Government to assessees under any provision of this Act, including the rounding off of the period for which such interest is to be calculated in cases where such period includes a fraction of a month, and specifying the circumstances in which and the extent to which petty amounts of interest payable by assessees may be ignored;]

(v) the regulation of any matter for which provision is made in section 420;

(l) the regulation of any matter for which provision is made in section 230;

Tax clearance certificate.

Similar

(w) the form and manner in which any appeal or cross-objection may be filed under this Act, the fee payable in respect thereof and the manner in which intimation referred to in section 358(3)(b) may be served;

(m) the form and manner in which any appeal or cross-objection may be filed under this Act, the fee payable in respect thereof and the manner in which intimation of any such order as is referred to in clause (c) of sub-section (2) of section 249 may be served;

(x) the circumstances, conditions and the manner in which, the Joint Commissioner (Appeals) or the Commissioner (Appeals) may permit an appellant to produce evidence which he did not produce or which he was not allowed to produce before the Assessing Officer;

8[(mm) the circumstances in which, the conditions subject to which and the manner in which, 23[the Joint Commissioner (Appeals) or the Commissioner (Appeals)]] may permit an appellant to produce evidence which he did not produce or which he was not allowed to produce before the 11[Assessing] Officer;]

(y) the form in which the statement under section 507 shall be delivered to the Assessing Officer;

(z) the maintenance of a register of persons other than legal practitioners or accountants practising before income-tax authorities and for the constitution of and the procedure to be followed by the authority referred to in section 515(5);

(n) the maintenance of a register of persons other than legal practitioners or accountants as defined in sub-section (2) of section 288 practising before income-tax authorities and for the constitution of and the procedure to be followed by the authority referred to in sub-section (5) of that section;

(za) the issue of certificate verifying the payment of tax by assessees;

(o) the issue of certificate verifying the payment of tax by assessees;

(zb) any other matter which by this Act is to be, or may be, prescribed.

(f) the manner in which and the period to which any such income as is referred to in section 180 may be allocated;

(3) In cases falling under sub-section (2)(b), where the income liable to tax cannot be definitely ascertained, or can be ascertained only with an amount of trouble and expense to the assessee, which is unreasonable, the rules made under this section may-

(a) prescribe methods by which an estimate of such income may be made; and

(b) in cases of income derived in part from agriculture and in part from business, specify the proportion of the income which shall be deemed to be income liable to tax,

and an assessment based on such estimate or proportion shall be deemed to be duly made as per this Act.

12[(mma) the form in which the statement under section 285B shall be delivered to the 13[Assessing] Officer;]

(p) any other matter which by this Act is to be, or may be, prescribed.

(3) In cases coming under clause (b) of sub-section (2), where the income liable to tax cannot be definitely ascertained, or can be ascertained only with an amount of trouble and expense to the assessee which in the opinion of the Board is unreasonable, the rules made under this section may-

(a) prescribe methods by which an estimate of such income may be made; and

(b) in cases coming under sub-clause (i) of clause (b) of sub-section (2) specify the proportion of the income which shall be deemed to be income liable to tax,

and an assessment based on such estimate or proportion shall be deemed to be duly made in accordance with the provisions of this Act.

Documents to be furnished on line or not to be furnished and to be produced on notice by AO.

Filing of forms in electronic manner.

Various reports and reporting forms and manner of furnishing and time limits under different provisions.

Various amounts to be prescribed in relevant provisions.

Filing of ITR forms and documents to be filed or not filed with ITR.

(4) The power to make rules conferred by this section shall include the power to give retrospective effect, from a date not earlier than the date of commencement of this Act, to the rules or any of them and, unless the contrary is permitted (whether expressly or by necessary implication), no retrospective effect shall be given to any rule so as to prejudicially affect the interests of assesses.

14[(4) The power to make rules conferred by this section shall include the power to give retrospective effect, from a date not earlier than the date of commencement of this Act, to the rules or any of them and, unless the contrary is permitted (whether expressly or by necessary implication), no retrospective effect shall be given to any rule so as to prejudicially affect the interests of assesses.