TaxTMI 
TaxTMI 
Comparison of section 423 "Interest for defaults in furnishing return of income." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....ome-tax department in calculating and demanding interest. Effective date or decision date: Not stated in the document. Background & Scope Statutory hook: Clause 423 in the Income Tax Bill, 2025 - Old Version (hereinafter "Clause 423 (Bill)"). Subject matter: interest chargeable for defaults in furnishing return of income. Coverage: outlines when simple interest at the rate implicit in the formula I = 1% x A x T becomes payable, defines the starting and ending dates for computation across specified circumstances, prescribes treatment where post-assessment orders alter tax, and defines components included in "tax paid". Definitions or explanations provided in the text: limited to the formula and the Table; the Bill supplies a definition of ....
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....est paid u/s 266, and the detailed meaning of "tax paid". Sub-section (5) treats an assessment made for the first time u/s 279 as a "regular assessment" for purposes of the section. Interpretation Legislative intent as indicated by the Bill text: to provide a simple, uniform interest formula for late or non-furnishing of returns and to tie the interest computation periods to concrete events (due date, date of furnishing, date of completion of assessment, dates specified in notices). The Table-driven approach indicates an intent to vary the tax base (A) and the start/end dates according to factual circumstances of how and when returns are filed or not filed. The inclusion of a detailed "tax paid" definition shows an intent to net off vario....
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.... under such notice. Starting date is the date immediately following the last date of time allowed under such notice (Bill text); ending date is date of furnishing; A is amount by which reassessed tax exceeds earlier tax. (The Bill text contains an omission in the cross-reference to the notice section; specifics Not stated in the document.) Interplay The Bill text expressly references multiple other provisions (sections 263, 268, 270, 271, 279, 280, 266, 267, 287, 288, 289, 359, 363, 365(10), 368, 377, 378, 206). Interplay with those provisions is central to determining starting/ending dates, the tax base (A), and credits. The Bill, as supplied, contains at least one omitted cross-reference (a missing section number in the Table at serial ....
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....al impact: same as above; potential to alter the period used for interest computation. * Omissions/typographical differences affecting clarity: The Bill's Table entry for serial number 3 contains an apparent omission - "Where return of income is required by a notice u/s issued after..." (the section number is missing). The Act provides the relevant contextual references (Act shows section 280 in related contexts). * Practical impact: omission creates ambiguity in the Bill text about which notice provision is referred to; this could cause interpretive uncertainty unless corrected. The Act text does not exhibit that omission in the supplied extract. * "Tax paid" definition - tax credit cross-references: The Act's clause (4)(d)(v....
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....ed specifying the sum payable"). * Practical impact: primarily drafting and clarity; no express substantive change beyond the items noted above based on the supplied texts. Practical Implications * Compliance and risk areas: The precise starting date language (whether the last date of time allowed or the day after that date) will affect calculation of months (T) - which could increase or decrease interest by the formula provided. Taxpayers filing in response to notices should be alert to how the start date is to be computed. Where the Bill's cross-references differ (notably to section 206), taxpayers should verify which tax credits count as "tax paid" for interest computations - the Bill text introduces uncertainty. The omission of....