TaxTMI 
TaxTMI 
Comparison of Section 26 "Income under head Profits and gains of business or profession" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....or profession" and set out an inclusive list of items treated as business/professional income. The changes between the two texts are largely phrasing and cross-reference adjustments, with a few substantive drafting shifts that may affect the scope of recapture and the cross-referenced deduction regime. Affected parties include taxpayers carrying on business or profession, partners and firms, and the tax department; effective date or commencement is Not stated in the document. Background & Scope Statutory hooks: both texts are presented as Clause/Section 26 under the Income Tax Bill/Act, 2025 and fall under the Part D heading "Profits and gains of business or profession". The clause(s) seek to define income chargeable under that head and p....
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....nclusive definition approach: items listed are expressly brought into business/professional income. The language used (e.g., "shall include") indicates a non-exhaustive list as typical in tax charging provisions. The enacted text shifts certain cross-references and expands the recapture reference to other statutory provisions (see below). Legislative intent as an overarching aim is to capture receipts related to business/professional activity and to provide recapture rules where capital allowances/deductions have been previously claimed - explicit legislative intent beyond the text is Not stated in the document. Exceptions/Provisos The provision contains specific carve-outs in sub-clause (h)(i)(A) and (B) excluding (A) sums received on tr....
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....to section 46 for recapture. Any interplay with Rules, Notifications or Circulars is Not stated in the document. Differences Between Documents and Practical Impact * Opening paragraph/sub-section (1) wording: Old draft states "The income from any business or profession carried on by the assessee at any time during the tax year shall be chargeable...". Enacted version states "The incomes referred to in sub-section (2) shall be chargeable...". * Practical impact: drafting shift narrows the immediate charging phrase to the items enumerated in sub-section (2), while the prior draft framed the charge as broader "income from any business or profession". The practical interpretive difference is limited because both texts ultimately list the i....
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.... technical know-how likely to assist..." whereas enacted text reads "information or technique likely to assist...". * Practical impact: marginal wording change; potential interpretive nuance between "technical know-how" and "information or technique" may slightly broaden or shift the class of protected items, but the documents provide no legislative clarification on intent. * Clause (j) - manner of valuation: Old draft uses "determined in the manner, as prescribed"; enacted text uses "determined in the manner, as may be prescribed". * Practical impact: enacted wording explicitly contemplates rule-making power ("may be prescribed"), but both formulations are typically used to enable subordinate legislation; the practical change is mini....
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....uneration and when determining firm taxable income. The documents do not provide procedural guidance or transitional rules; transitional treatment is Not stated in the document. * Record-keeping/evidence: Where receipts arise from termination/modification of management/agency/contract, sale of licences, non-competition agreements, or Keyman insurance proceeds, taxpayers should retain contracts, calculation workings, valuations (for fair market value of inventory converted to capital asset), details of allowances claimed u/s 35AD or section 46, and firm resolution/partnership deeds evidencing partner payments - the document does not prescribe specific records but the inclusive list implies evidentiary needs relevant to these items. Key Ta....