TaxTMI 
TaxTMI 
TaxTMI 
Legislative Scrutiny of Delegated Legislation in Indian Tax Law : Clause 534 of the Income Tax Bill, 2025 Vs. Section 296 of the Income-tax Act, 1961
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....ovisions mandating the laying of rules and certain notifications before Parliament. Clause 534 of the Income Tax Bill, 2025 seeks to continue and, in certain respects, refine this tradition, replacing the existing Section 296 of the Income-tax Act, 1961. This commentary undertakes a detailed examination of Clause 534, analyzing its content, purpose, and implications, and then provides a comparative analysis with Section 296. The discussion will highlight the continuities and changes, interpretive issues, and practical significance of these provisions within the broader framework of tax administration and legislative control. Objective and Purpose The primary objective of Clause 534, like its predecessor Section 296, is to ensure parliamen....
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....h may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in such rule, or notification or both Houses agree that the rule, should not be made or the notification should not be issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification. A breakdown of its key components: 1. Scope of Instruments to be Laid * Rules made under the Act: This include....
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....gal Effect and Safeguards * The provision balances the need for oversight with administrative certainty, preventing retrospective invalidation of actions. * It also sets a clear time frame and process for parliamentary intervention, after which the rule or notification stands as issued if no action is taken. Practical Implications The practical effects of Clause 534 are significant for various stakeholders: * Central Government and Tax Authorities: The executive must ensure that all relevant rules and notifications are timely laid before Parliament, failing which questions about their enforceability may arise. The provision imposes a procedural discipline and transparency obligation. * Taxpayers and Advisors: Taxpayers can take as....
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....ority for Advance Rulings, and the Appellate Tribunal, and every notification issued under specific provisions, to be laid before each House of Parliament for a total period of thirty days, which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or successive sessions, both Houses agree to modify or annul the rule or notification, it shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification. 1. Scope of Instruments Section 296 covers: * Every rule made....
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....or annul before the expiry of the session immediately following the laying period. 3. Legal Effect of Modification or Annulment Both provisions stipulate that: * After modification or annulment by both Houses, the rule/notification is effective only in the modified form or ceases to have effect. * Actions taken prior to modification or annulment remain valid ("without prejudice" clause). 4. Legislative and Policy Context Section 296 has evolved through multiple amendments, reflecting changes in tax administration (e.g., creation of the AAR, changes to the Settlement Commission, introduction of new notification powers). The narrowing in Clause 534 may be a deliberate move to streamline the oversight mechanism in light of institutiona....
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....eases the importance of ensuring compliance for those instruments that remain covered. * For Parliament: The provision continues to empower Parliament with oversight, though the opportunity for intervention remains limited in practice due to political and procedural realities. * For Taxpayers: The narrowing of scope may mean fewer opportunities to challenge rules/notifications on procedural grounds, but also streamlines the legal framework and reduces uncertainty. * For the Judiciary: Courts may be called upon to interpret the scope and consequences of the laying requirement, especially in transitional cases between the old and new regime. Conclusion Clause 534 of the Income Tax Bill, 2025 embodies the constitutional principle of le....