The Evolution of Representative Assessee Provisions : Clause 303 of the Income Tax Bill, 2025 Vs. Section 160 of the Income-tax Act, 1961

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....ept of a representative assessee is not novel; it traces its lineage to Section 160 of the Income-tax Act, 1961, which has governed this area for decades. The 2025 Bill, however, aims to update, clarify, and potentially expand the scope in line with evolving legal and economic realities. This commentary undertakes a detailed analysis of Clause 303, exploring its objectives, structure, and implications. It then provides a comprehensive comparative analysis with Section 160 of the 1961 Act, identifying key similarities, differences, and potential issues. The analysis is structured to address each item and sub-provision, highlighting legislative intent, practical impact, and areas of ambiguity or reform. Objective and Purpose The legislativ....

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....me specified in section 9. This ensures that non-resident income with a nexus to India is effectively taxed by making the Indian agent liable. * Income of Minors or Persons of Unsound Mind (Clause (b)): The guardian or manager entitled to receive income on behalf of a minor or a person who is mentally ill is made the representative assessee. This is essential, as such persons lack legal capacity. * Court-appointed Managers (Clause (c)): Where income is received by the Court of Wards, Administrator-General, Official Trustee, or a court-appointed receiver or manager, these entities are treated as representative assessees. The provision is broad, covering any person who "in fact manages property on behalf of another," ensuring that de fact....

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....nting retrospective claims or disputes regarding their status. Sub-Clause (3): Definition of Oral Trust Clause 303(3) defines "oral trust" as a trust not declared by a duly executed instrument in writing and not deemed to be such under sub-section (2). This negative definition clarifies the scope of clause (e), ensuring that only those trusts truly lacking written documentation are treated as oral trusts. Sub-Clause (4): Status as Assessee Under Clause 303(4), every representative assessee is deemed to be an "assessee" for the purposes of the Act. This is a foundational provision, conferring all rights, obligations, and liabilities of an assessee on the representative, including the duty to file returns, pay tax, face assessment proceed....

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....gents of non-residents, while Section 160 refers to Section 163. This reflects renumbering or reorganization in the 2025 Bill, but the substantive principle remains unchanged. * Deeming Provisions for Trusts * Both provisions contain a mechanism by which an oral or informal trust can be treated as a written trust if a written statement is submitted to the Assessing Officer within specified timelines. * The timelines and requirements are identical, ensuring continuity and certainty for trustees and beneficiaries. * Definition of Oral Trust * The negative definition in Clause 303(3) mirrors Explanation 2 to Section 160, maintaining clarity and preventing overlap or ambiguity between categories. * Status as Assessee * Section 160....

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.... failures, penalties, and interest. * Agents of Non-Residents: Indian agents or representatives of non-residents must be aware that they are the primary point of contact for the Indian tax authorities and may be required to discharge tax liabilities on behalf of the non-resident. * Trust Structures: The treatment of oral trusts and the option to regularize them through written statements provides flexibility but also creates compliance obligations that must be timely fulfilled. For Tax Administration * Widening the Tax Net: The provisions ensure that income cannot escape taxation by being routed through intermediaries, thus strengthening the tax base. * Administrative Clarity: By defining who is responsible for tax compliance in co....