The Income Tax Bill, 2025 introduces substantive restructuring of "profits in lieu of salary" provisions through Clause 18, replacing Section 17(3) of Income-tax Act, 1961. The revised framework bifurcates compensation treatments for employment termination and modification of terms, while maintaining coverage for pre and post-employment payments. Key changes include a streamlined three-part structure for payments from employers and funds, introduction of schedule-based exclusions replacing complex Section 10 cross-references, and clearer categorization of Keyman insurance policy payments. The amendments provide enhanced clarity for both taxpayers and employers through simplified reference systems and explicit distinction between taxable and non-taxable components, while preserving the fundamental scope of profit in lieu of salary taxation.
The Income Tax Bill, 2025 introduces substantive restructuring of "profits in lieu of salary" provisions through Clause 18, replacing Section 17(3) of Income-tax Act, 1961. The revised framework bifurcates compensation treatments for employment termination and modification of terms, while maintaining coverage for pre and post-employment payments. Key changes include a streamlined three-part structure for payments from employers and funds, introduction of schedule-based exclusions replacing complex Section 10 cross-references, and clearer categorization of Keyman insurance policy payments. The amendments provide enhanced clarity for both taxpayers and employers through simplified reference systems and explicit distinction between taxable and non-taxable components, while preserving the fundamental scope of profit in lieu of salary taxation.
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