TaxTMI 
TaxTMI 
A New Paradigm for Income Tax Return Filing in India : Clause 263 of the Income Tax Bill, 2025 Vs. Section 139 of the Income-tax Act, 1961
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....solidate and rationalize the obligations of different taxpayer categories concerning the filing of returns. * To introduce greater clarity and precision in the timelines and procedural requirements for return filing, including provisions for revised and updated returns. * To broaden the compliance net by including new classes of persons and conditions for mandatory return filing, especially in the context of global financial transparency and anti-abuse measures. * To align the Indian tax administration with international best practices, especially regarding reporting of foreign assets and income, and to foster voluntary compliance through extended opportunities to file updated returns. * To empower the Central Board of Direct Taxes (CBDT) and the Central Government with rule-making and exemption-granting powers to ensure administrative flexibility. Historically, Section 139 has evolved through numerous amendments to address loopholes, expand the tax base, and respond to emerging economic realities. Clause 263 seeks to codify these developments in a more coherent and accessible format, suitable for a modern digital tax administration. Detailed Analysis of Clause 263 of the....
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....mber, depending on the nature of the entity and audit/reporting requirements. * Comparison with Section 139(1) Explanations: The approach is similar to the current regime, but the table format in Clause 263 enhances accessibility and reduces the risk of interpretative errors. The inclusion of partners and spouses (where applicable) aligns with the current law but is more explicitly stated. 3. Rule-Making Powers and Return Particulars (Sub-clause 2) Clause 263(2) empowers the Board to prescribe the form, manner, and particulars for return filing, including electronic filing, verification, and supporting documentation. It also lists the particulars that may be required, such as exempt income, asset details, bank accounts, high-value expenditures, audit reports, and business structure details. * Comparison with Section 139(6), (6A): Both provisions confer similar powers, but Clause 263 provides a more structured and detailed enumeration, reflecting the increasing complexity of taxpayer profiles and the need for granular data for risk assessment and compliance monitoring. 4. Exemptions from Filing (Sub-clause 3) The Central Government is authorized to exempt certain classes of ....
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....ay may be condoned. * Comparison with Section 139(9): The procedure is largely identical, but Clause 263 codifies the process in a more concise and accessible manner. The definition of a defective return is to be prescribed, allowing for adaptation as return forms and requirements evolve. 8. Returns Filed Pursuant to Orders and Exemptions for Senior Citizens (Sub-clause 8) Returns filed in compliance with certain orders are deemed to be covered under Clause 263, but specified senior citizens (with TDS) are exempted for the relevant year. * Comparison with Section 139: This is a modernization, reflecting recent policy moves to ease compliance for senior citizens and to ensure that returns filed under directions or orders are subject to the same rules as regular returns. 9. Definitions (Sub-clause 9) Clause 263 provides detailed definitions for "beneficial owner," "beneficiary," "specified entity," and "specified laws." These definitions are crucial for interpreting the reporting obligations, especially for foreign assets and institutional entities. * Comparison with Section 139 Explanations: The definitions are similar but more systematically organized and expanded in Clau....
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....imilar categories, but Clause 263 consolidates and expands the list, especially regarding institutional entities and prescribed conditions. * Computation of Thresholds: Clause 263 explicitly requires computation of income for threshold purposes without regard to certain exemptions/deductions, reducing ambiguity. * Updated Returns: Both provide for updated returns, but Clause 263 is more detailed in exclusions and process. * Defective Returns: The process is similar, but Clause 263 defers the definition of "defective" to prescribed rules, allowing for future-proofing. * Exemptions and Rule-Making: Both allow government flexibility, but Clause 263's language is more contemporary. Rule 12AB of the Income-tax Rules, 1962 Rule 12AB, notified in 2022, prescribes specific conditions (turnover, professional receipts, TDS/TCS, bank deposits) that trigger mandatory filing for persons otherwise not required u/s 139(1)(b). * Integration in Clause 263: Clause 263(1)(a)(xi) and the associated rule-making powers allow for such conditions to be prescribed, ensuring that the administrative flexibility of Rule 12AB is retained and potentially expanded. * Policy Impact: The inc....