TaxTMI 
TaxTMI 
Comparison of Section 193 "Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....e Income Tax Bill, 2025 (Old Version). Both address tax treatment of income from Global Depository Receipts (GDRs) acquired in foreign currency by resident employees of certain knowledge-based Indian companies or their subsidiaries. The documents matter to resident individual employees, employers in specified industries, tax administrators and advisers. Effective date or enactment/decision date: Not stated in the document. Background & Scope Statutory hook: provision numbered 193 in the Income-tax Act, 2025 (and correspondingly in the Income Tax Bill, 2025 - Old Version). Subject-matter: special tax treatment and specified rates for income from dividends on GDRs purchased in foreign currency under employee stock schemes and long-term capi....
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....e; information technology service; entertainment service; pharmaceutical industry; bio-technology industry; and any other industry or service specified by Central Government notification). "Information technology software" and "information technology service" are defined with technical descriptions. The provision also treats subsidiary as per Companies Act, 2013 s.2(87), expressly including subsidiaries incorporated outside India. Interpretation The Act indicates a legislative intent to subject two specific types of GDR-related incomes received by resident employees in specified industries to specified, concessional or specialised tax rates (10% for dividends and 12.5% for LTCG), while preserving the regular taxation regime for the remain....
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....loyee has salary and also realises LTCG of INR Y on transfer of qualifying GDRs. LTCG taxed at 12.5%; the LTCG amount is excluded from gross total income for purposes of computing deductions - deductions are applied against the reduced gross total income (i.e., gross total income minus the GDR incomes). The remaining income is taxed at rates in force. Note: The text does not provide worked numerical examples. Not stated in the document. Interplay The provision expressly disapplies section 72(6) for computation of LTCG on the specified GDR transfers. It also cross-refers to Companies Act, 2013 s.2(87) for the definition of subsidiary. Any interaction with other sections, notifications or rules beyond those explicitly mentioned: Not stated....
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....ifies that for the residual taxable income (total income reduced by GDR income), existing tax rates (i.e., the rates otherwise in force) apply. The Bill language could be read as repeating a computation result rather than pointing to applicable rates. The Act aligns the table to conventional statutory drafting where special rates are set and remaining income taxed at prevailing rates. * Punctuation and enumeration of Table items in definitions: - Bill separates clauses in definition (4)(a)(i)-(iii) with slightly different punctuation and includes a trailing "and" before clause (f). - Act uses semicolons, and clause (f) follows without trailing "and." * Practical impact: These are drafting/presentation differences with no substantive cha....
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....d to maintain documentation proving (a) GDRs were acquired under the relevant ESOS and purchased in foreign currency; (b) GDRs are of an Indian issuing company and listed on a recognised Indian stock exchange (where applicable) or meet other listing criteria in clause (4)(a); (c) employment status and industry classification of the employer/subsidiary. The statute does not prescribe specific forms or timelines. Not stated in the document. Key Takeaways * The Act prescribes special tax rates for GDR-related dividend income (10%) and long-term capital gains (12.5%) for resident employees of specified knowledge-based companies or their subsidiaries. * GDR incomes are segregated from gross total income for the purpose of deduction computat....