TaxTMI 
TaxTMI 
Comparison of Section 175 "Avoidance of tax by certain transactions in securities." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....er or beneficial holder. It matters to investors, custodians, trading businesses, mutual funds, business trusts and tax authorities. Effective date or enactment date: Not stated in the document. Background & Scope Statutory hooks: Clause 175 (Income Tax Bill, 2025 - Old Version). Context: Special provisions aimed at preventing tax avoidance arising from transactions in securities where the economic entitlement to interest/dividend is separated from legal receipt through sale, reacquisition or similar securities transfers. Coverage: owners and persons having beneficial interest in securities; securities and units; record date mechanics for entitlement to dividend/income/additional securities. Definitions provided within the clause include ....
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....he text include substance over form (deeming income to the owner/beneficial holder), temporal attribution (apportionment on day-to-day accrual logic in subsection (3)), and anti-arbitrage via short-term purchase/sale around record dates. The "similar securities" test relies on equivalence of rights and remedies rather than form or nominal amounts. Exceptions/Provisos The clause provides that the deeming provisions in subsections (1), (2) and (3) shall not apply if the owner or beneficial owner can satisfy the Assessing Officer that either there has been no avoidance of income-tax or that any avoidance was exceptional and not systematic and that in any of the three preceding years the taxpayer had not engaged in the nature of transaction r....
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....nition, notably section 208(3)(c) and section 2(21) for units and business trusts, and regulation 2(1)(b) of the SEBI AIF Regulations for Alternative Investment Funds. It also references the Explanation to section 10(35) of the Income-tax Act, 1961 for the Mutual Fund/Administrator/specified company concept. Interaction with these provisions determines the set of entities and instruments caught by the record date rules. No rules, notifications or circulars are expressly mentioned beyond these statutory/regulatory cross-references. Differences Between the Two Provisions and Practical Impact * Source/status: Document 1 is presented as "Section 175 of Income-tax Act, 2025" (final/statute form). Document 2 is presented as "Clause 175 of the ....
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....," for the same. * Practical impact: This is a drafting variation with negligible substantive effect on interpretation; both aim to signal that the listed meanings apply to the section. * Specificity of cross-references and historic statutory anchors: Document 1 names the Unit Trust Act (58 of 2002) when providing definitions; Document 2 cites the Income-tax Act, 1961 (43 of 1961) Explanation to section 10(35). * Practical impact: The two different anchors may produce interpretive consequences where the cross-referenced provisions themselves differ in scope or wording; this may affect applicability to Administrator/specified company entities and consequently the reach of record-date related anti-avoidance rules. * Substantive provis....
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....over prior years, and documentation of beneficial ownership and entitlements to dividends/bonuses to satisfy the AO's enquiries. Not stated in the document: specific forms or format for such records. Key Takeaways * The clause adopts a deeming approach to attribute interest/dividends to original owners/beneficial holders where transfers and reacquisitions or similar securities trades separate legal receipt from economic entitlement. * The provisions apply irrespective of other charging provisions; they prioritize substance over form to prevent avoidance. * Exceptions exist but require the taxpayer to satisfy the Assessing Officer that no avoidance occurred or that any avoidance was exceptional and not systematic with a clean thre....