Comparison of Section 51 "Amortisation of expenditure for prospecting certain minerals" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....t on amalgamation/demerger. It affects taxpayers engaged in prospecting, extraction or production of specified minerals (Indian companies and residents other than companies). Effective/decision date: Not stated in the document. Background & Scope Statutory hook: Clause 51 of the Income Tax Bill, 2025 (heading: Amortisation of expenditure for prospecting certain minerals). Scope: the Clause applies to an assessee who is an Indian company or a person (other than a company) resident in India engaged in operations relating to prospecting for, extraction or production of any mineral. It governs deduction of expenditure incurred in specified years for prospecting or development of mines or natural deposits of minerals listed in Part A or Part B....

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....and written off at 10% per year across ten "relevant" years. The text indicates legislative intent to provide tax relief for exploration/prospecting costs while preventing double relief (see subsection (9)). The explicit exclusion of depreciable assets and acquisition costs suggests intent to confine the benefit to exploration/development expenditure rather than asset acquisition. The reduction in (3) prevents duplication where third parties fund expenditure or where realisations (sale/salvage/insurance/compensation) arise from the expenditure. Exceptions/Provisos Key carve-outs and procedural conditions: * The instalment is limited by subsection (5)(b) if the instalment would reduce the income from commercial exploitation to below nil ....

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.... the relevant years have been audited before the specified date in section 63 and the audit report for the first year of claim is furnished as prescribed. (Numerical illustration Not stated in the document.) Interplay The Clause cross-references section 33 (depreciation) and section 63 (specified date for audit). It also refers to Schedule XII (Part A and Part B) for the list of minerals. No other Rules, Notifications or Circulars are expressly referenced in the text. Specific forms, dates and formats for audit reports are left to subordinate prescription ("as prescribed"). Differences between the two provisions and practical impact Comparison of Document 1 (Section 51 of Income-tax Act, 2025) with Document 2 (Clause 51 of Income Tax Bi....

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....ally, the Bill text could lead to ambiguity whether exclusions in (4) are applied before calculating the instalment; the Act text removes that ambiguity by expressly reducing by (3) and (4). This affects taxable deduction amounts and timing of allowable amortisation. * Carry forward wording (subsection (6)): Document 1 uses "carried forward to the subsequent tax year, becoming part of the instalment of that tax year" and limits carry forward beyond the tenth tax year from tax year in which commercial production began. Document 2 uses "carried forward to the next year, becoming part of the instalment of that tax year" with the same ten-year cap. * Practical impact: Largely drafting; no substantive difference in effect-both permit carry f....

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..../salvage/insurance/compensation, and detailed asset registers to demonstrate that capital assets claimed under depreciation are not claimed under this amortisation. For non-company taxpayers, audited accounts and the prescribed audit report are mandatory before claiming. Key Takeaways * The Bill provides a ten-year amortisation (10% per year) for qualifying prospecting and development expenditure relating to minerals specified in Schedule XII. * Qualifying expenditure is limited to amounts incurred in the year of commercial production and up to four preceding years; certain acquisitions and depreciable capital expenditures are excluded. * Expenditure is reduced by third-party funding and by realizations such as sale, salvage, compens....