Transforming Faceless Inquiry of Tax Administration : Clause 532 of the Income Tax Bill, 2025 Vs. Section 142B of the Income-tax Act, 1961
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....differ in scope, application, and the breadth of their enabling powers. This commentary provides a detailed analysis of Clause 532, examining its objectives, mechanisms, and practical implications. It then compares and contrasts these features with Section 142B, highlighting the evolution in legislative approach and the broader policy shifts reflected in the new Bill. Objective and Purpose Clause 532 is situated within the miscellaneous provisions of the Income Tax Bill, 2025, and serves as an enabling provision granting the Central Government broad powers to frame schemes for the administration of the Act. The express intention is to impart greater efficiency, transparency, and accountability in tax administration. This is to be achieved....
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....39; initiatives started in recent years. * Optimizing Resource Utilization: The clause contemplates the use of economies of scale and functional specialization, i.e., organizing tax administration so that resources are allocated efficiently, possibly through centralized processing, specialized teams, or automated systems. Unlike Section 142B, which was limited to certain specified procedures, Clause 532 is drafted in broad terms, allowing schemes to be made for "any of the purposes of this Act." This represents a significant expansion of the government's powers to redesign the tax administration architecture. 2. Modification of Statutory Provisions (Sub-section 2) Clause 532(2) authorizes the Central Government, for the purpose of ....
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.... issued under sub-sections (1), (2), and (3) be laid before each House of Parliament as soon as may be after its issuance. This provides a measure of legislative oversight over the exercise of these broad executive powers, consistent with the practice for subordinate legislation in India. 5. Delegation to the Board While the main text of Clause 532 refers to powers of the Central Government, the explanatory note indicates that the Board (i.e., the Central Board of Direct Taxes or CBDT), subject to the control of the Central Government, may be empowered to make schemes. This reflects the administrative reality that the CBDT is the primary executive agency for income tax administration, operating under the supervision of the Ministry of Fin....
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....ope and Breadth Section 142B was a targeted provision, limited to facilitating faceless inquiries, assessments, audits, and valuations under specified sections (142 and 142A). Its primary focus was on specific procedural aspects of assessment and valuation. In contrast, Clause 532 is a general enabling provision, authorizing schemes for "any of the purposes of this Act." This marks a significant expansion in scope, allowing the government to redesign not only assessment procedures but potentially any aspect of tax administration, compliance, or enforcement. 2. Mechanisms for Efficiency and Transparency Both provisions share the objectives of eliminating interface, optimizing resource utilization, and (in the case of Section 142B) introdu....
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....an u/s 142B. While the Supreme Court of India has upheld the validity of delegated legislation in tax matters (provided essential legislative functions are retained by Parliament), the power to modify or disapply statutory provisions by notification is always subject to constitutional scrutiny. The requirement of parliamentary oversight is an important safeguard, but it remains to be seen how robustly this will be exercised in practice. Ambiguities and Issues in Interpretation Clause 532's broad language gives rise to several interpretive questions: * Limits of Delegation: How far can the government go in modifying statutory provisions? Are there implied limits, or does the clause permit modification of even substantive rights and o....
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....er Impact and Compliance Considerations The principal impact of Clause 532 will be felt by: * Taxpayers: Will need to adapt to evolving compliance procedures, digital interfaces, and potentially less personalized interaction with the department. * Tax Professionals: Will need to stay updated with changing schemes and procedural modifications, and may need to develop new skills in digital compliance and representation. * Tax Administration: Will require ongoing investment in technology, training, and change management to successfully implement and adapt schemes under Clause 532. Potential Areas for Reform or Clarification * Defining Limits of Modification: Consideration could be given to specifying limits on the power to modify sta....