TaxTMI 
TaxTMI 
Comparison of SCHEDULE II "INCOME NOT TO BE INCLUDED IN TOTAL INCOME" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....ffected parties include policyholders, insurers, employers, employees, pension subscribers, IFSC entities and tax authorities. Effective dates are stated within specific entries (for example, policy issue periods and 1 April 2002/2023) where provided; no single overarching commencement date for the Schedule is stated in the Bill text. Background & Scope Statutory hook: SCHEDULE II (See section 11) - "Income not to be included in total income." The Schedule lists categories of exempt income (column B) subject to conditions (column C). Definitions and notes at the end assign meanings to terms used in the table. The Bill (Old Version) is the source document for this commentary. Any differences vis-`a-vis the enacted Act are identified only i....
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....e-insurance receipts and retirement/savings vehicles by reference to issue dates, premium ratios, aggregate premium ceilings and contribution thresholds. The insertion of equalisation-levy related exclusion (Sl. No. 15) signals explicit recognition of overlap between equalisation-levy chargeability and income-tax neutrality for certain cross-border digital services. Exceptions/Provisos Key carve-outs and conditions provided in the Bill include: * Life-insurance sums excluded only if policies meet period-specific premium-to-sum-assured ratios and, for certain periods, aggregate premium ceilings (Rs. 2,50,000 or Rs. 5,00,000) - and certain sums (section 127 receipts; Keyman policies) are expressly ineligible. * Portions of interest on p....
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....e for exclusion (threshold exceeded Rs.5,00,000); the portion not excluded to be computed as prescribed (procedure Not stated in the document). Interplay The Bill references other statutory instruments and provisions: Section 11 (hook), Section 127 (for life-insurance ineligibility), Schedule XI para 8, Schedule XV (definition of "actual capital sum assured"), Insurance Regulatory regulations, the Provident Funds Act, Government Savings Promotion Act (Sukanya Samriddhi), Dept. notifications regarding NPS (notifications not reproduced in the Bill text), Finance Act, 2016 (equalisation levy Chapter VIII) and section 159 agreements. The Bill contemplates Board guidelines for removal of difficulties. Where computation methods are required ("a....
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....ut then adds the IFSC carve-out for policies issued on/after 1-Apr-2025. Practical impact: domestic policyholders unchanged, IFSC policyholders gain advantage. NPS-related entries (Sl. Nos. 15 & 16) The Bill lacks specific entries for "lump sum amount" defined by a particular notification and for Unified Pension Scheme subscriber-specific references. The Act adds two discrete entries (Sl. Nos. 15 and 16) dealing with NPS payments to Unified Pension Scheme subscribers and "lump sum amount" per a departmental notification dated 24 Jan 2025. Practical impact: greater specificity and targeted exemption for Unified Pension Scheme subscribers under NPS, linking to a concrete notification (FX-1/3/2024-PR). This reduces uncertainty for affec....
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.... and Income-tax chargeability; the clause excludes income chargeable to equalisation levy except where the income is otherwise taxable in India as royalty/FTS under notified agreements (thus creating an interplay with tax treaty determinations and notifications u/s 159). * IFSC references: the Bill treats certain IFSC insurance intermediary office receipts differently in the life-insurance entry (exclusion/inclusion language differs versus the Act). Parties operating within IFSCs should note the special treatment and any administrative guidance forthcoming. * Procedural uncertainty: multiple entries defer to "as prescribed" computations and to notifications by the Central Government; until those are issued, taxpayers face interpretation....