Comparison of section 323 "Liability of directors of private company." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....ompany. A key difference between the two texts is the presence in the Bill (Old Version) of a saving provision on conversion of a private company to a public company (sub-section (2) in the Bill) which does not appear in the later Act text. Who is affected: directors of private companies (current and past directors during the relevant tax year) and, indirectly, tax authorities. Effective date or decision date: Not stated in the document. Background & Scope Statutory hook: Clause/Section 323 appearing in the Income Tax Bill, 2025 / Income-tax Act, 2025 concerning "Liability of directors of private company". The provision operates "irrespective of anything contained in the Companies Act, 2013" and establishes director liability where tax du....

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....(3): In this section, "tax due" includes penalty, interest, fees or any other sum payable under the Act. Scope: The clause targets directors (every person who was a director at any time during the relevant tax year) of private companies and companies that were private in the relevant tax year. Liability is joint and several for "tax due" where recoverability from the company fails. Interpretation Legislative intent and interpretive principles indicated by the text: Not stated in the document. The text itself signals a clear remedial/collective liability objective by imposing joint and several liability "irrespective of anything contained in the Companies Act, 2013," but no legislative note or explanatory memorandum is provided in the doc....

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....ears. (This example illustrates the saving provided only in the Bill text.) * Example 3: A company that was private in the relevant tax year converts to a public company, and tax assessed for a year after 1 April 1961 is unrecoverable. Under the Bill, sub-section (2) would not exempt directors for such later years; under the Act (where the saving is omitted), no such exemption exists. (Illustrates difference in treatment.) Interplay Interaction with the Companies Act, 2013: The clause operates "irrespective of anything contained in the Companies Act, 2013," thereby creating an express statutory override to any company law provisions that might otherwise limit director liability for corporate obligations. No other Rules/Notifications/Cir....

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....ward into the Act text. * Substantive wording otherwise consistent: Both texts share the substantive rule in sub-section (1) and the definition of "tax due" (penalty, interest, fees or any other sum payable). Both operate "irrespective of anything contained in the Companies Act, 2013." There are no other material textual differences stated in the documents provided. * Practical impact: The core imposition of joint and several liability, and the qualification that a director may avoid liability only by proving the non-recovery "cannot be attributed to any gross neglect, misfeasance or breach of duty on his part," remains constant between the versions and continues to create significant exposure for directors of private companies. Practi....