Disallowing the set-off of losses against undisclosed income detected through searches, requisitions, or surveys : Clause 120 of Income Tax Bill, 2025 Vs. Section 79A of Income Tax Act, 1961

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....gainst undisclosed income consequent to search, requisition and survey. Income Tax Bill, 2025 Introduction Clause 120 of the Income Tax Bill, 2025, introduces a significant provision that restricts the set-off of losses or unabsorbed depreciation against undisclosed income that arises due to a search, requisition, or survey. This clause is a part of the broader legislative framework aimed at cu....

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.... to enhance revenue collection by taxing undisclosed income at full rates without any deductions, thereby discouraging the practice of hiding income and assets. Detailed Analysis of Clause 120 of the Income Tax Bill, 2025 Clause 120 operates irrespective of any other provision in the Income Tax Bill, 2025, underscoring its overriding nature. It explicitly states that no loss, whether carried for....

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....Act, 1961 Section 79A of the Income Tax Act, 1961, introduced by the Finance Act, 2022, contains similar provisions to Clause 120, with minor differences in language and structure. Both provisions aim to disallow the set-off of losses or unabsorbed depreciation against undisclosed income resulting from searches, requisitions, or surveys. However, there are notable distinctions: 1. Scope and De....

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....islative framework of the Income Tax Bill, 2025. Practical Implications The practical implications of Clause 120 are significant for taxpayers subject to searches, requisitions, or surveys. Businesses and individuals will need to maintain comprehensive and accurate financial records to avoid the classification of income as undisclosed. The inability to set off losses against such income means t....