Streamlining Advance Tax Credit in Indian Tax Legislation : Clause 410 of the Income Tax Bill, 2025 Vs. Section 219 of the Income Tax Act, 1961

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....ary undertakes a detailed examination of Clause 410, elucidates its objectives, analyzes its provisions, and compares it with the existing Section 219. The analysis considers the broader legislative context, practical implications, and potential areas of ambiguity or reform. Objective and Purpose The legislative intent behind both Clause 410 of the Income Tax Bill, 2025, and Section 219 of the Income Tax Act, 1961, is to establish a clear and fair mechanism for the crediting of advance tax payments made by taxpayers. The rationale is twofold: * To recognize advance tax payments as discharge of tax liability pertaining to the relevant income period. * To ensure that taxpayers are not subjected to double taxation or denied the benefit o....

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.... assessee in the regular assessment process, ensuring that the tax paid in advance is set off against the final tax liability. Interpretation and Legal Principles * Clause 410 is drafted in straightforward language, minimizing ambiguity. The exclusion of penalty and interest is consistent with the principle that only the tax component should be eligible for set-off. The inclusion of both voluntary payments and recoveries ensures that the provision applies uniformly, regardless of whether the advance tax was paid proactively or enforced by the authorities. * The phrase "in respect of the income of the tax year in which it was payable" is significant. It clarifies that the credit is tied to the relevant tax year and prevents the possibil....

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....ofessionals * Aids in accurate computation of advance tax and planning of quarterly payments. * Ensures that tax deducted at source (TDS) and advance tax are properly reconciled during assessments. Comparative Analysis with Section 219 of the Income Tax Act, 1961 Text of Section 219  "Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment." Key Similarities * Nature of Paymen....

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.... for laypersons. * Statutory Scope: The reference to "this Part" in Clause 410 versus "this Chapter" in Section 219 may reflect a reorganization of the statute in the new Bill. The substantive effect, however, remains unchanged unless the scope of the Part or Chapter differs. * Historical Context: Section 219 originally contained a proviso (now omitted) that dealt with specific scenarios, such as the treatment of advance tax in case of change in status or partition of a Hindu Undivided Family. Clause 410 omits such detail, possibly delegating exceptional cases to rules or other provisions. Potential Issues in Transition The transition from the 1961 Act to the 2025 Bill may give rise to certain transitional issues: * How will advance....