TaxTMI 
TaxTMI 
The Evolution of Asset Cost Computation in Business Income Head: Clause 39 of the Income Tax Bill, 2025 vs. Section 43 of the Income Tax Act, 1961
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....isions aimed at modernizing and streamlining the taxation framework in India. Clause 39 of this Bill deals with the computation of the actual cost of assets for the purposes of determining profits and gains of business or profession. This clause is pivotal in understanding how businesses calculate depreciation and other related deductions. Comparatively, Section 43 of the Income Tax Act, 1961, pro....
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....es a similar purpose but within the context of the tax laws prevalent at the time of its enactment. It provides detailed definitions and explanations for terms used in the computation of business income, ensuring consistency and clarity in tax assessments. Detailed Analysis Clause 39 of the Income Tax Bill, 2025 * Sub-section (1): Defines the actual cost of an asset, reducing it by amounts met....
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....the cost by amounts met by others but includes specific provisions for motor cars and non-cheque payments. * Explanations: Provides detailed scenarios for determining actual cost, including asset gifts, re-acquisitions, and use in scientific research. * Provisions for Amalgamation and Demerger: Aligns with Clause 39 in maintaining continuity of asset cost in corporate restructuring. * Intere....
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....ation. Comparative Analysis While Clause 39 and Section 43 share several similarities in defining actual cost and handling subsidies, the former introduces updated provisions reflecting changes in the business environment and technology, such as the emphasis on electronic payments. Clause 39 also provides a more structured approach to handling indirect subsidies and grants, offering a formulaic ....