TaxTMI 
TaxTMI 
TaxTMI 
Comparison of Section 52 "Amortisation of expenditure for telecommunications services, amalgamation, demerger, scheme of voluntary retirement, etc." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....munications spectrum/licence fees, payments under voluntary retirement schemes, and expenditure for amalgamation/demerger). It matters because it prescribes the timing and manner in which these expenditures are allowed as deductions and the tax consequences on transfer. Affects taxpayers in telecom, Indian companies undergoing amalgamation/demerger, employers implementing voluntary retirement schemes, and tax authorities administering deductions. Effective date/decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 52 of the Income Tax Bill, 2025; falls under "Profits and gains of business or profession." The clause prescribes amortisation rules for four categories of expenditure listed in a Table in sub-sec....
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.... tax years. * Sl. No.3 - Spectrum fee (capital expenditure actually paid to acquire right to use spectrum): initial year is later of (a) commencement of telecom services business or (b) actual payment of spectrum fee; amortisation over period the spectrum remains in force (from initial year to the tax year up to which spectrum remains in force). * Sl. No.4 - Licence fee (capital expenditure actually paid to acquire right to operate telecom services): initial year is later of (a) commencement of telecom services business or (b) actual payment of licence fee; amortisation over period licence remains in force. Interpretation Legislative intent, as discernible: to provide a structured, time-spread tax deduction for specific capital and no....
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....ted/resulting company: clauses (a)-(d) do not apply to the amalgamating or demerged company and all provisions continue to apply to the amalgamated/resulting company "as if the transfer has not taken place" (sub-section (2)(e)). * Where part of a right is transferred and sub-section (2)(b) & (c) do not apply, remaining deduction is computed by deducting proceeds from remaining unallowed expenditure and dividing by the number of relevant tax years not expired at the beginning of the tax year of transfer (sub-section (3)). * On failure to comply with provisions after a deduction for spectrum (Sl. No.3) has been claimed and granted, the deduction is deemed wrongly allowed; AO may recompute total income for that tax year, section 287 applie....
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....where Clause 52 deduction is claimed (Sl. No.3/4); section 287 - procedural recomputation and limitation periods in cases of wrongful allowance (Sl. No.3). No other Rules/Notifications/Circulars are referenced in the clause. Interaction with other parts of the tax code (e.g., capital gains, transfer pricing, accounting standards) is not addressed in the text. Not stated in the document: any prescribed forms, returns, or documentary proof requirements beyond the computation rules. Differences between the Clause 52 of the Income Tax Bill, 2025 (Document 2) and Section 52 of the Income-tax Act, 2025 (Document 1) Comparison of Section 52 (Income-tax Act, 2025) (Document 1) with Clause 52 (Income Tax Bill, 2025 - Old Version) (Document 2) show....
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....erence - business reorganisation (paragraph (6)): The Bill's paragraph (6)(a) provides that "the provisions of this section shall continue to apply to the successor entity for the tax year in which the business reorganisation took place and subsequent tax years," while the Act's paragraph (6)(a) provides that "the provisions of this section, as far as may be, shall continue to apply to the successor entity as they would have applied to the predecessor entity if such reorganisation had not taken place." * Practical impact: the Act's formulation broadens (or at least reframes) the continuity rule by (i) adding the qualification "as far as may be," introducing a potential limitation linked to feasibility or compatibility, and (ii....
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....g/evidence points suggested by text: evidence of actual payment dates for spectrum/licence fees, documentation of commencement of telecom business, clear records of amount of unallowed expenditure at time of transfer, contractual/transaction documents for transfer/amalgamation/demerger, and records proving compliance with conditions of the Clause in respect of spectrum deduction (since sub-section (5) contemplates recomputation on failure to comply). Key Takeaways * Clause 52 mandates time-based amortisation for specified expenditures (amalgamation/demerger, voluntary retirement, spectrum/licence fees) with specified initial years and periods. * For spectrum and licence fees, the amortisation period is co-terminous with the force of th....