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    Understanding the Business Loss Carry Forward Provisions in Clause 112 of the Income Tax Bill, 2025 ...
    Understanding the Carry Forward of House Property Losses in Clause 110 of Income Tax bill, 2025 Vs. ...
    Addresses the set-off of losses under various heads of income In Clause 109 of Income Tax Bill, 2025...
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    The chargeability of income in the context of the transfer of assets with Exception in Clause 97 of ...
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    Carry forward of business losses allows set off against future business income, prioritised before other carried allowances.
    Clause 112 permits carry forward and set off of unabsorbed business losses-defined as losses under "Profits and gains of business or profession" excluding speculation losses-against future business or professional profits, mandates that such losses be set off before any other carried forward allowances, and limits the period during which losses may be carried forward, aligning with the existing temporal framework.
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    Carry forward of house property loss - allows head-specific set off against future house property income, time-limited.
    Clause 110 permits unabsorbed losses under the head "Income from house property" to be carried forward and set off only against future income from the same head, subject to a statutory time limitation, and defines "unabsorbed loss from house property" as losses not set off against other income heads in the relevant year.
    Act RulesBills
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    Set-off of losses: new limits bar using business and capital losses to reduce salary and other non-capital income.
    Clause 109 permits set-off of losses under any income head except capital gains against income from other heads in the same year, subject to limits: business losses cannot be set off against salary income; house property losses are set off against other heads only up to a capped amount; and capital gains losses cannot be set off against non-capital income. The clause thus confines capital losses within their category and imposes head-specific restrictions requiring careful tax planning and record-keeping.
    Act RulesBills
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    Set-off of losses under the same head: clarifies offset rules for capital and non-capital income, refining capital gains set-off.
    Clause 108 permits set-off of a loss from any source against income from any other source under the same head (excluding capital gains), while treating capital gains losses separately: long-term capital losses may be set off only against other long-term capital gains, and short-term capital losses may be set off against gains from any capital asset, thereby requiring accurate classification of assets and records to effect permissible intra-head offsets.
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    Deemed income from informal credit instruments: non account payee transactions treated as taxable, prompting formalisation of payments.
    Clause 106 and Section 69D deem amounts borrowed or repaid through hundis, negotiable instruments, or Board specified modes to be the income of the borrower or repayer when not transacted by account payee cheque, with provisions capturing interest where applicable and safeguards to prevent double taxation once an amount has been treated as income.
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    Unexplained expenditure treated as income increases tax exposure when taxpayers fail to satisfactorily explain expenditure sources.
    Clause 105 deems unexplained expenditure as income when an assessee fails to provide a satisfactory explanation, confers evaluative power on the Assessing Officer to judge adequacy of explanations, and disallows any deduction for amounts so deemed; Section 69C operates similarly but uses permissive language and contains a deduction proviso, reflecting comparable objectives to prevent tax evasion while differing in textual strictness and potential administrative effect.
    Act RulesBills
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    Unexplained asset rules now include virtual digital assets, expanding deeming powers where explanations are unsatisfactory.
    Where an asset is unrecorded or its recorded amount is less than actual value and the assessee fails to provide a satisfactory explanation, Clause 104 and Section 69B treat the unexplained excess as deemed income for the year of discovery; Clause 104 expressly adds virtual digital assets, while both provisions vest the Assessing Officer with discretion to accept or reject explanations, creating valuation and verification challenges.
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    Unexplained investments treated as income when taxpayer fails to satisfactorily explain source, shifting burden to taxpayer and empowering assessing officer discretion.
    Clause 103 deems unrecorded investments or amounts exceeding recorded investment as income if the assessee fails to provide a satisfactory explanation to the Assessing Officer; the provision places the evidential burden on the assessee and employs a deeming mechanism to include unexplained amounts in taxable income. Section 69B applies the same explanation-and-deeming approach to investments, bullion, jewellery and other valuable articles where recorded amounts are less than actual expenditure, relying on Assessing Officer evaluation to determine whether excess amounts are to be treated as income.
    Act RulesBills
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    Unexplained assets treated as deemed income: inclusion of virtual digital assets broadens taxable asset coverage and disclosure obligations.
    Clause 104 deemsthe value of assets not recorded, or under recorded, in an assessee's books to be taxable income where the assessee fails to provide a satisfactory explanation; it expressly includes virtual digital assets and places onus on the assessee to prove the nature and source, leaving determination of adequacy to the Assessing Officer.
    Act RulesBills
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    Unexplained investments deemed income under deeming provision; imposes explanation burden and increased tax scrutiny on taxpayers.
    Clause 103 treats investments not recorded in the assessee's books, and amounts exceeding recorded investments, as unexplained unless the assessee provides a satisfactory explanation; such unexplained investments are deemed income for the relevant tax year, subject to the Assessing Officer's evaluation under the clause's deeming provision.
    Act RulesBills
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    Unexplained credits: dual-party explanation requirement leads to inclusion of unexplained book credits as taxable income.
    Unexplained credits are chargeable to income when sums in an assessee's books lack satisfactory explanation, with the assessing officer determining adequacy. Loans and borrowings require satisfactory explanations from both the assessee and the creditor; share application money, share capital and share premium in closely held companies similarly demand corroboration from the company and the named contributor. Venture capital funds and companies receive a specific exemption, while the provision overall increases recordkeeping and evidentiary burdens and enhances tax authority scrutiny.
    Act RulesBills
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    Income apportionment in AOPs and BOIs: structured deduction and allocation of member remuneration and interest for tax computation.
    Both Clause 309 and Section 67A set out a structured method for computing a member's share in an AOP/BOI: deduct interest, salary, bonus, commission or remuneration from total AOP/BOI income, apportion the residual among members by entitlement and treat apportioned shares under the same heads of income; where apportioned results are profitable the remuneration is added back, and where loss it is adjusted; interest on capital borrowed by a member for investment is deductible under Profits and gains of business or profession; "paid" means actually paid or incurred per the accounting method used.
    Act RulesBills
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    Total income aggregation requires inclusion of exempt receipts to protect the tax base and prevent erosion through exclusions.
    Clause 101 mandates that computation of Total income include income exempt under the identified sub part of Chapter provisions, converting such exempt receipts into an affirmative component of total income to protect the tax base and prevent erosion from otherwise excluded income streams.
    Act RulesBills
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    Income attribution: clarifies tax liability of the legal owner and joint-and-several responsibility for income included in another's return.
    Clause 100 assigns tax liability to the person in whose name an asset stands or whose firm membership produces attributed income, imposes joint and several liability for jointly held assets allowing recovery from any co-owner for the whole tax due, applies existing procedural recovery mechanisms to enforce the liability, and overrides contrary provisions in other laws to ensure primacy in determining tax obligations arising from income attribution.
    Act RulesBills
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    Clubbing of income: new clause expands inclusion of spouse, minor child and transferred-asset income in assessee's taxable income.
    Clause 99 attributes to the individual income arising to a spouse from employment or remuneration in concerns where the individual has a substantial interest, income from assets transferred to a spouse or a son's wife without adequate consideration, and income of a minor child except earnings from the child's manual work or personal skill; it also prescribes a formula for income attributable when transferred assets are invested and treats conversion of individual property to HUF as income of the individual.
    Act RulesBills
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    Revocable transfer definitions broaden tax reach, treating arrangements that preserve transferor control as attributable income to transferor.
    Clause 98 of the Income Tax Bill, 2025 and Section 63 of the Income Tax Act define transfer to include settlements, trusts, covenants, agreements or arrangements, and define revocable transfer to cover provisions enabling direct or indirect re transfer of income or assets or re assumption of power by the transferor. Both provisions attribute income to the transferor where economic substance shows retention of control or benefit, broadening the tax net over arrangements that preserve transferor influence.
    Act RulesBills
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    Chargeability of income in asset transfers: revocable transfers taxed to transferor, with narrow irrevocable-transfer exceptions.
    Clause 97 treats income from a revocable transfer of assets as taxable in the hands of the transferor, while providing exceptions for truly irrevocable transfers where the transferor derives no direct or indirect benefit; if a power to revoke later arises the income becomes chargeable to the transferor, thereby aligning taxation with economic control and preventing tax avoidance through strategic transfers.
    Act RulesBills
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    Transfer of income without asset transfer: such income is taxed in the transferor's hands to prevent tax avoidance.
    Clause 96 and Section 60 provide that income arising by virtue of a transfer, whether revocable or irrevocable and irrespective of timing, is chargeable to tax in the transferor's hands if the asset generating that income has not been transferred, thereby preserving the link between income and its source asset to prevent tax avoidance.
    Act RulesBills
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    Remission of liabilities taxable - forgiven debts and other benefits must be included as income when received under revised charge rules.
    Clause 95 of the Income Tax Bill, 2025, treats any benefit obtained from the remission or cessation of a liability for which a deduction was previously allowed as taxable in the year received, applying principles from Section 38(1)(a) to non business income heads. Section 59 of the Income tax Act, 1961, applies Section 41(1) similarly to ensure forgiven liabilities are included in taxable income, but both provisions present valuation and timing ambiguities for non cash benefits and assessment year determinations.
    Act RulesBills
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    Disallowance of deductions: withholding compliance ties deductibility for cross border payments and personal expenses.
    Clause 94 disallows deductions from income from other sources for personal expenses and for interest or salaries payable outside India where tax has not been paid or deducted under the withholding framework; it extends selected business-income deduction rules to other sources, prescribes computation rules for foreign companies, disallows deductions for gambling and lotteries while excepting horse racing maintenance, and links deductibility to compliance with withholding obligations.

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      CUSTOMS DUTY EXEMPTIONS / CONCESSIONS BEING ALLOWED TO LAPSE

      24 July, 2024

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      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      Certain BCD exemptions entries under S No. 50/2017-Customs dated 30.6.2017 and other notifications are being allowed to lapse with effect from 30.9.2024.

      (a) The following entries of notification no. 50/2017-Customs dated 30.6.2017 are being allowed to lapse with effect from 30.9.2024:

      S. No.

      S N of 50/2017 Customs

      Description

      1.

      478

      Wireless apparatus, accessories and parts as specified in List 29 imported by a licensed amateur radio operator

      2.

      353

      Foreign currency coins when imported into India by a Scheduled Bank

      3.

      387

       Zinc metal recovered by toll smelting or toll processing from zinc concentrates exported from India for such processes

      4.

      441

      Spinnerettes made inter alia of Gold, Platinum and Rhodium or any one or more of these metals, when imported in exchange of worn-out or damaged spinnerettes exported out of India

      5.

      238

      Organic/inorganic Coating material for manufacture of electrical steel

      6.

      254

      Catalyst for manufacture of cast components of Wind Operated Electricity Generator

      7.

      255

      Resin for manufacture of cast components of Wind Operated Electricity Generator

      8.

      277A

      Calendared plastic sheet for manufacturing of Smart Card under chapter heading 8523

      9.

      339

      Concessional rate on import of Toughened glass with low iron content and transmissivity of minimum 91% and above, for use in manufacture of solar thermal collectors or heaters

      10.

      421

      Specified goods required for basic telephone service, cellular mobile telephone service, internet service or closed users’ group 64 KBPS domestic data network via INSAT satellite system service and parts, for manufacture of the goods

      11.

      479

      Mono or Bi polar Membrane electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters for caustic soda or potash units; Membrane and parts thereof or other parts for caustic soda or potash units;

      12.

      475

      Specified goods including scramblers, descramblers, encoders, decoders, jammers, network firewalls, network sniffers, scanners and monitoring systems, probes for data monitoring and SMS/MMS monitoring systems

      13.

      482

      Newspaper page transmission and reception facsimile system or equipment; and Telephoto transmission and reception system or equipment

      14.

      495

      Batteries for electrically operated vehicles, including two and three wheeled electric motor vehicles.

      15.

      497

      Active Energy Controller (AEC) for use in manufacture of Renewable Power System (RPS) inverters

      16.

      579

      Survey (DGPS) instruments, 3D modeling software for ore body simulation cum mine planning and exploration (geophysics and geochemistry) equipment required for surveying and prospecting of minerals

      17.

      419

      Aluminium Oxide for manufacture of washcoat of catalytic converter

      18.

      420

      Clay 2 powder for use in ceramic substrate for catalytic convertor

      19.

      340

      Solar tempered glass or solar tempered (anti-reflective coated) glass for use in manufacture of solar cells/panels/modules

      20.

      565

      Specified goods for use in the manufacture of Flexible Medical Video Endoscope [heading 9018]

      21.

      566

       Specific input goods for manufacture of syringes, needles, catheters and cannulae

      22.

      568

      Parts and components for manufacture of blood pressure monitors and blood glucose monitoring system (Glucometers)

      Note: Description of entries is indicative. Notification may be referred to for complete description.

      (b) The following notifications are being allowed to lapse with effect from 30.9.2024:

      S. No

      Notification No.

      Description

      1.

      97/99-Customs dated 21 July 1999

      Exempts BCD and additional duty under Sections 3(1), 3(3) and 3(5) on standard gold bars imported by a RBI authorised bank

      2.

      30/2004-Customs dated 28 January 2004

      Provides full exemption from BCD to second-hand computers/accessories and peripherals received as donation by schools, charitable institutions.

      3.

      102/2007-Customs dated 14 September 2017

      Provides exemption from Special Additional Duty (SAD) levied vide section 3(5) of CTA on to all goods imported for subsequent sale when IGST, CGST, SGST or UTGST paid by importer.

      4.

      45/2005-Customs dated 16 May 2005

      Provides exemption from Special Additional Duty levied under Section 3(5) of CTA on goods cleared from SEZ to DTA.

      5.

      151/94-Customs dated 13 July 1994

      Provides exemption to imports of duty-paid fuel and lubricating oil on aircrafts taken during the outward flight; goods imports by United Arab Airlines; aircraft engines, spares imported by Indian Airlines and Air India International. Re-import entries will operate from re-import notification 45/2017-Cus

      6.

      26-Customs dated 19th February 1962

      Provides exemption from import duty under the Sea Customs Act on catering cabin equipment, food and drink on re-importation by aircrafts of the Indian Airlines Corporation from foreign flights

      Note: Description of entries is indicative. Notification may be referred to for complete description.


      Full Text:

      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      Topics

      ActsIncome Tax