Residence in India: income-linked deeming now captures high-income returning citizens visiting short-term, and POEM defines company residence.
Section 6 prescribes residence tests combining day-count rules (182-day and 60/365 tests), categorical exceptions for ship crew and visiting citizens/PIOs, an income-linked modification that extends the shorter day-count threshold for higher-income returning citizens, a deeming rule capturing citizens not taxable elsewhere, company residence via Indian status or Place of Effective Management, and a deeming provision that applies residence across all income sources; As Passed drafting clarifies interplay between the visiting exception and income-based modification and contains minor typographical refinements.

Scope of total income: residents taxed broadly with limited foreign income inclusion for not ordinarily resident persons.
Section 5 sets the scope of total income by applying receipt and accrual tests: residents are taxed on income received or deemed received in India, income accruing or arising or deemed to accrue or arise in India, and foreign income only in limited cases for a person who is not ordinarily resident (foreign income included when derived from a business controlled in India or a profession set up in India). Non residents are taxed on income received or deemed received in India and income accruing or arising or deemed to accrue or arise in India. The section also prevents balance sheet inclusion from constituting receipt and bars double inclusion on accrual and receipt bases.

Charge of income-tax: linkage to central rates and application to total income, with withholding and advance payment obligations.
Section 4 links the charge of income-tax to rates enacted by a Central Act, charges income-tax on the total income of the tax year of every person (while allowing charging for other specified periods), includes any additional income-tax by whatever name, and requires deduction/collection at source and advance payment for income chargeable under the section.

Stamp duty value treated as a notional benchmark for tax valuations, overriding conflicting valuation laws for tax purposes.
Section 2(105) defines stamp duty value as the value adopted, assessed or assessable by a Central or State authority for stamp duty on immovable property, where "assessable" is expressly a notional value the authority would have adopted if referred the matter, and that definition applies irrespective of anything to the contrary in any other law in force.

Holding-period tiers determine capital gain classification with a shorter threshold for listed securities and specific fund units.
Definition of short-term capital asset establishes a two-tier holding-period regime for capital gains classification, retaining a general holding-period test and a shorter test for listed securities, units of the Unit Trust of India, units of equity-oriented funds and zero-coupon bonds; detailed rules determine inclusion, exclusion and commencement of holding periods on liquidation, corporate reorganisations, conversions, allotments, renunciations, free allotments and GDR redemptions, with certain technical matters deferred to prescribed rules.

Definition of company in which the public are substantially interested: drafting variance may create conjunctive interpretation risk affecting tax classification.
Clause 2 supplies a comprehensive glossary for the Income-tax Act, 2025, defining terms such as company, capital asset, income and virtual digital asset, often with cross-references, provisos and delegated prescriptions; clause 2(29)'s categories for a company in which the public are substantially interested are materially consistent between Bill and Act, but the Bill's connector wording risked a conjunctive reading of alternative tests that the Act's later disjunctive phrasing rectifies, creating interpretive consequences for tax classification and related compliance.

Definition of company clarified; temporal qualification in transitional limb may narrow which historic entities remain within tax scope.
Section 2 supplies statutory definitions that determine tax coverage. The definition of company comprises Indian companies, foreign bodies corporate, entities assessable as companies under the repealed Act, and Board declared entities. The Bill adds a temporal qualification limiting entities assessed under the prior Act to particular assessment years; the Act text omits this qualification. Scattered drafting and cross reference differences exist. Operational consequences hinge on threshold facts (shareholding, listing, assessment history, population/distance tests) and on unstated transitional provisions.

Capital asset definition updated to include IFSC-regulated funds and broaden unit-linked policies, affecting capital gains treatment.
The Act retains an inclusive definition of capital asset with exceptions for stock-in-trade, specified personal effects and certain agricultural land, while refining the securities limb to expressly include securities held by FIIs and investment funds regulated under SEBI or IFSC regimes and removing a temporal issuance-date qualifier for unit-linked insurance policies, thereby broadening the category of policies treated as capital assets; numerous drafting and cross-reference clarifications aim to reduce interpretive uncertainty.

Income deemed to accrue in India when linked to an Indian business connection, property, services, or specified payments.
Section 9 deems income arising outside India to accrue in India where it is derived directly or indirectly from a business connection in India, from property or a source of income in India, or from transfer of a capital asset situated in India. It also treats salary for services rendered in India, government-paid salary to Indian citizens for foreign services, dividends by Indian companies to non-residents, and specified interest, royalties and technical fees (subject to exceptions based on use outside India) as deemed to accrue in India. Gifts by residents to non-residents after 5 July 2019 are similarly deemed.

Current repairs classification distinguishes capital expenditure from revenue deductions for building and machinery repairs under income tax rules.
Classification of current repairs determines whether expenditures on buildings and on plant and machinery are revenue deductions or capitalised: enduring benefit or substantial enhancement is capital, while routine restorative or replacement outlays that merely maintain existing earning capacity are revenue; Sections 30 and 31 provide the statutory context for rent, rates, taxes, repairs and insurance for buildings and for machinery, plant and furniture.

Eligibility for SUGAM ITR-4: resident individuals, HUFs and resident firms with presumptive business income may use the simplified return.
Eligibility to file Form SUGAM (ITR-4) is limited to resident individuals, resident HUFs (other than not ordinarily resident), and resident firms (excluding LLPs) deriving business or professional income computed under presumptive provisions of sections 44AD, 44ADA or 44AE. Explicit exclusions bar persons with foreign assets/signing authority/income, directorships, unlisted equity holdings in the previous year, income above the prescribed limit, more than one taxable house property, brought forward or carry forward losses, assessments where tax was deducted in another's hands, claims under double taxation provisions or deduction under section 91, certain agricultural income, and incomes taxable under specified special heads.

ITR form eligibility limited to resident individuals with salary, single house and non lottery other income; foreign interests excluded.
Form SAHAJ (ITR 1) is available only to resident individuals whose taxable income arises solely from salaries or family pension, income from a single house property without brought forward or current losses under that head, and other sources excluding lottery winnings and race horse income, provided they do not fall into disqualifying categories such as foreign assets, foreign income or signing authority, income requiring apportionment, directorships, unlisted equity shareholdings, tax assessed on income with TDS in another person's hands, claims for double taxation relief, specified deductive claims, agricultural income above a small threshold, or total income above the prescribed upper limit.

Foreign tax credit conversion uses telegraphic transfer buying rate on the last day of preceding month.
Foreign tax credit is determined by converting the currency of the foreign-tax payment at the telegraphic transfer buying rate applicable on the last day of the month immediately preceding the month in which that tax is paid or deducted.

Foreign Tax Credit documentation: verified income statement plus certificate and payment or deduction proof to claim credit.
Foreign Tax Credit eligibility requires a verified statement of foreign income and foreign tax paid in the prescribed form, plus a certificate or statement specifying the nature of the income and tax deducted or paid issued by the foreign tax authority, the person who deducted the tax, or signed by the taxpayer, accompanied by a tax challan or online payment acknowledgement for payments and proof of deduction where tax was withheld.

Foreign tax credit allowed against MAT/AMT like normal tax, but any excess over normal provisions is ignored.
Foreign tax credit under Rule 128 of the Income tax Rules, 1962, is allowable against tax payable under MAT or AMT in the same manner as under the normal provisions; any foreign tax credit available against MAT/AMT that exceeds the credit allowable under normal provisions is ignored when computing MAT/AMT credit.

Foreign tax credit: credit limited to lower of domestic tax and foreign tax; treaty excess is disregarded.
Rule 128 of the Income tax Rules, 1962 limits Foreign Tax Credit to the lesser of domestic tax chargeable on the doubly taxed income and the foreign tax actually paid, and directs that any foreign tax paid in excess of the tax payable under the applicable DTAA be ignored for credit computation.

Foreign Tax Credit denial: no credit for domestic interest, fees or penalties and for disputed foreign taxes.
Rule 128 restricts Foreign Tax Credit by disallowing FTC against interest, fees or penalties payable under the Income-tax Act, and by excluding any foreign tax (or part thereof) that is disputed by the assessee.

Foreign Tax Credit requires evidence of settlement, proof of payment and an undertaking within six months of dispute resolution.
Foreign Tax Credit (FTC) is allowed for disputed foreign tax only if, within six months from the end of the month in which the dispute is finally settled, the assessee furnishes evidence of settlement, evidence that the tax liability has been discharged by the assessee, and an undertaking that no refund in respect of that amount has been or will be claimed.

Foreign tax definition determines FTC scope: DTAA-covered taxes apply, otherwise income-tax-type foreign levies qualify for credit.
Definition of foreign tax for Foreign Tax Credit under Rule 128: where a DTAA exists, foreign tax is the tax covered by that DTAA; where no DTAA exists, foreign tax is the tax payable under the foreign country's law in the nature of income-tax as defined in the statutory explanation, including excess profits tax or business profits tax charged on profits by central or local authorities.

Foreign tax credit proportionate allocation ensures foreign tax relief is apportioned when income is taxed across multiple years.
Foreign tax credit under the Income tax Rules operates on a proportionate allocation principle when the same income is taxable in more than one year; the credit entitlement must be apportioned across the years in which the income is offered to tax so that relief for foreign taxes corresponds to the portion of income taxed in each year.