TaxTMI 
TaxTMI 
Evolution of Self-Assessment: Continuity and Change in Indian Tax Law : Clause 266 of the Income Tax Bill, 2025 Vs. Section 140A of the Income-tax Act, 1961
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....of renumbering or cosmetic change; it reflects a broader legislative intent to streamline, clarify, and, in certain respects, expand the scope of self-assessment obligations. Both provisions share a common objective: to ensure that an assessee, before furnishing their return of income, discharges their liability towards tax, interest, and fees, taking into account various credits and reliefs available under the law. However, Clause 266 introduces nuanced changes in language, coverage, and procedural requirements, which merit detailed analysis. This commentary systematically examines each aspect of Clause 266, contrasts it with the corresponding elements of Section 140A, and evaluates the implications for taxpayers, administrators, and the o....
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....ied by proof of such payment. Comparative Note: Section 140A(1) similarly requires payment of self-assessment tax, interest, and fee before return filing, but references a different set of sections (e.g., sections 139, 142, 148, 153A, 158BC) relating to the requirement to file a return. The 2025 Bill appears to update and reorganize these references, possibly reflecting a new structure for return filing obligations under the proposed law. Key Features: * Explicit inclusion of interest and fee, reinforcing the obligation to pay all ancillary dues. * Mandatory accompaniment of return with proof of payment, ensuring documentary compliance. Sub-section (2): Credits and Reliefs to be Considered Clause 266(2) enumerates the amounts to ....
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....late filing fees) are prioritized, followed by interest (a compensatory charge), and finally the principal tax. Sub-sections (4) and (5): Computation of Interest Clause 266(4) stipulates that interest u/s 423 is to be computed on the tax declared in the return, reduced by advance tax, TDS/TCS, reliefs, and credits listed in sub-section (2). Clause 266(5) provides that interest u/s 424 is to be computed on the "assessed tax" or the shortfall of advance tax. Comparative Note: Section 140A(1A) and (1B) set out similar rules for the computation of interest u/ss 234A (for delay in filing return) and 234B (for shortfall in advance tax). The structure and logic are parallel, with updated section references in the 2025 Bill. Sub-section (6): ....
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.... return filing, with documentary proof. * Expose the taxpayer to penal consequences for shortfall or default, including being deemed an assessee in default. * Require awareness of the latest provisions and section references, especially as the 2025 Bill reorganizes the law. * For Businesses: * Necessitate robust internal processes for tax computation and compliance. * Increase the importance of accurate data on TDS/TCS and foreign tax credits. * Potentially impact cash flows, as all dues must be settled before return filing. * For Tax Administrators: * Facilitate easier verification of returns, as payment proof is mandatory. * Enable prompt initiation of recovery proceedings in case of default. * Reduce disputes at the a....
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.... * The transition to new section numbers may cause temporary confusion among taxpayers and professionals. * The precise scope of certain referenced sections (e.g., section 391(2)) will depend on the final text and interpretation of the 2025 Bill. * The requirement for proof of payment, while administratively beneficial, may create compliance challenges in cases where payments are made close to the filing deadline. Policy and Administrative Considerations * The self-assessment regime is central to voluntary compliance; the clarity and user-friendliness of Clause 266 will determine its effectiveness. * The explicit prioritization of fee and interest over tax in the adjustment of short payments aligns with the revenue's interest i....