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    Bad and doubtful debt deductions - Clause 31 of the Income Tax Bill, 2025 vs. Section 36 of Income T...
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    Bad debt deductions: new limits and conditions for financial institutions, distinguishing rural-advance treatment and recovery rules.
    Clause 31 of the Income Tax Bill, 2025 creates a structured regime for deductions for provisions for bad and doubtful debts and for bad debts written off, prescribing percentage-based deduction limits for specified financial institutions with an additional allowance for rural-branch advances; it requires that write-offs be reflected in income computations, provides for partial recovery treatment, and distinguishes provisions from actual bad debts while aligning deductions with accounting and disclosure standards.
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    Search and seizure powers expanded to permit access to digital records, enhancing tax enforcement while raising privacy concerns.
    Clause 247 expands search and seizure authority to electronic media and digital records, authorising officers to access and seize emails, social media, trading and bank accounts where information indicates non production of documents or undisclosed assets; it modernises enforcement by treating digital records equivalently to physical evidence while raising privacy and misuse concerns that require procedural safeguards.
    Act RulesBills
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    Insurance premium deductions permit tax relief for business stock, cattle insurance, and employer-paid health cover via non-cash payments.
    Clause 30 permits deduction for premiums paid for insurance against damage or destruction of business stocks, for premiums by federal milk cooperative societies to insure the life of cattle of primary society members engaged in milk supply, and for employers' premiums for employee health insurance provided payment is made through non-cash modes under approved schemes.
    Act RulesBills
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    Employee welfare deductions clarified: new limits, timing and eligibility for employer contributions under Clause 29.
    Clause 29 prescribes conditions and limits for deducting employer contributions to recognized provident funds, approved superannuation funds, pension schemes (subject to a uniform percentage of salary including dearness allowance), and approved gratuity funds, sets the due date rules for employee contributions, and restricts deductions for provisions or contributions unless expressly authorised, thereby clarifying and refining the deductibility regime compared with current Sections 36 and 40A.
    Act RulesBills
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    Employee welfare deductions clarified: permitted employer contributions to approved funds subject to prescribed limits and arm's-length scrutiny.
    Deductions for employer contributions to specified employee welfare vehicles are permitted only when made to recognised or approved funds and in accordance with prescribed limits, timing and conditions; provision-only gratuity reserves are generally non-deductible unless conditions are met, and contributions to other funds or trusts are disallowed except as expressly allowed or required by law.
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    Tax deduction for agricultural and skill development projects streamlines incentives while barring duplicate claims under the Act.
    Clause 47 permits deductions for expenditures on agricultural extension projects and for companies' skill development projects, excluding land and building costs, subject to Board notification and requisite documentation. It includes an express prohibition on claiming the same expenditure under any other provision of the Act for the same or any other tax year, consolidating and streamlining prior separate incentives while imposing compliance obligations to substantiate eligibility.
    Act RulesBills
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    Site restoration fund deductions limited and conditional; misuse of withdrawals treated as taxable income under new regime.
    Clause 49 and Schedule X create a Site Restoration Fund regime allowing deductions for deposits into specified accounts subject to caps and conditions: claims require a government agreement and audited accounts, deposits must be made by year-end, withdrawals are restricted to scheme purposes and misuse is taxed as income, expenditures funded by withdrawals are nondeductible, and disposals tied to the scheme within a set period reverse deductions and are taxed.
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    Capital expenditure deduction for specified businesses enables immediate full write-off, subject to eligibility, exclusivity and usage conditions.
    Clause 46 permits full deduction of capital expenditure for a specified business in the year incurred, including pre-operational capitalized expenditure, subject to conditions: no splitting or reconstruction of existing businesses, prohibition on previously used machinery or plant, and, for certain sectors, fulfillment of regulatory approval and operational criteria; it bars claiming other deductions for the same expenditure and requires assets to be used exclusively for the specified business for at least eight years.
    Act RulesBills
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    Amortization of preliminary expenses enables staged tax relief for businesses under the new income tax provision.
    The clause permits staged deduction of specified preliminary expenses by allowing an Indian company or resident individual to deduct one fifth of eligible preliminary expenses in each of five successive tax years, subject to an overall ceiling computed at the option of the taxpayer against either project cost or capital employed; eligible expenditures include feasibility and project reports, market and engineering studies, legal charges and other prescribed preparatory costs, and a statement of expenditure must be furnished to the prescribed authority.
    Act RulesBills
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    Amortisation of expenditure: Tax treatment extended to telecommunications, amalgamation, demerger and voluntary retirement schemes clarified.
    Clause 52 provides for amortisation of expenditures: amalgamation or demerger costs and voluntary retirement payments are amortisable over five tax years from the tax year of the event or payment; spectrum and licence fees for telecommunication services are amortisable over the period the rights remain in force, beginning in the later of business commencement or payment year. It further addresses tax consequences on transfer of such rights and empowers the Assessing Officer to rectify income where deductions were incorrectly claimed.
    Act RulesBills
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    Research expenditure deductions expanded under new clause; certification and continuity rules affect pre commencement and institutional payments.
    Clause 45 allows deductions for capital and revenue scientific research expenditures related to business, excluding land acquisition; permits certified pre commencement expenditures up to three years; allows payments to research associations, universities and approved companies; conditions claims on prescribed documentation and compliance; protects deductions when approvals are later withdrawn; and contains provisions on non duplication of deductions, depreciation applicability, and amalgamation asset treatment.
    Act RulesBills
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    Depreciation rules modernized to clarify asset categories and additional allowances, affecting business tax deductions and compliance.
    Clause 33 creates a unified regime for depreciation on tangible and intangible assets used in business or profession, excluding goodwill; mandates written down value treatment for a block of assets with proportional deductions for partial business use; halves rates for assets used less than 180 days; provides pro rata apportionment on succession, amalgamation and demerger; treats leasehold improvements as depreciable buildings; permits late claims and carry forward of unabsorbed depreciation; allows disposal deductions for written down value shortfalls; and grants additional depreciation for new machinery and plant in manufacturing and power generation.
    Act RulesBills
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    Deductions for rent and repairs clarified: proportionate claims allowed for partial business use under new clause.
    Clause 28 consolidates deductions for premises, machinery, plant, and furniture used wholly and exclusively for business or profession, allowing deductions for insurance premiums, local taxes, rent, and current (non-capital) repairs. It preserves tenant-specific rent and repair claims and imposes an explicit apportionment rule: where assets are not wholly used for business, deductions are limited to a fair proportionate part as determined by the Assessing Officer, thereby centralising assessment discretion and requiring supporting documentation for partial-use allocations.
    Act RulesBills
    Show AI Summary
    Business income taxation modernisation clarifies taxable receipts and expands scope to include government-related compensations and non-monetary benefits.
    Clause 26 restates chargeability of income under the head "Profits and gains of business or profession" for the tax year, replacing the term "previous year," and refines categories of taxable receipts by expressly including compensation for termination or contract vesting with government bodies, consolidating export incentives, recognizing non-monetary benefits, and preserving existing treatments for partner receipts, Keyman insurance proceeds, inventory-to-capital conversions, capital-asset sums, speculative transactions, and the exclusion of residential letting income.
    Act RulesBills
    Show AI Summary
    Owner definition clarified in income tax reform, expanding deemed ownership and streamlining property tax provisions.
    The Bill clarifies the owner concept for house property income taxation by expressly deeming transfers without adequate consideration to close relatives as ownership (with specified exceptions), streamlining provisions for impartible estates, cooperative society members, and part-performance rights, expanding categories of transactions that create ownership-like rights with specific lease-term criteria, and omitting prior references to annual and capital charge and service taxes to simplify the framework.
    Act RulesBills
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    Co-ownership taxation clarifies individual assessment and allocation of rental income among co-owners under broadened property scope.
    Taxation of income from co-owned property preserves individual assessment and allocation by definite and ascertainable shares, excludes association-of-persons treatment, broadens the scope of "property," simplifies income computation references to the relevant Chapter, and clarifies relief for self-occupied interests by direct cross-reference to the relief provision.
    Act RulesBills
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    Deductions from house property: Bill streamlines deduction rules and documentation requirements for interest and construction periods.
    Clause 22 restructures deductions from house property by preserving the standard deduction and interest allowance while imposing a capped interest deduction, clearer rules for prior period interest, and explicit documentation obligations including detailed interest certificates and treatment of refinancing. It extends the construction completion period for deduction eligibility and revises the linkage and references for foreign interest restrictions, aiming to standardise limits, conditions, and verification procedures.
    Act RulesBills
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    Taxation of arrears of rent: clause mainstreams treatment, taxes on receipt, and preserves standard deduction.
    Proposed Clause 23 treats arrears of rent and unrealised rent as income from house property taxed in the year of receipt or realisation, preserves applicability despite change of ownership and the 30% standard deduction, and reorganises provisions into distinct subsections for chargeability, inclusion in total income, and deductions while substituting "tax year" for "financial year" and simplifying language to reduce interpretive ambiguity.
    Act RulesBills
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    Annual value determination simplified: bill streamlines rent-based criteria, expands deductions and vacancy rules to ease compliance.
    Determination of the annual value is streamlined to a two criterion test-expected rent and actual rent-while vacancy is addressed in a separate subsection, local authority taxes and specified service taxes are consolidated as deductible items, stock in trade nil value relief is extended, and self occupied property rules retain a two house concession with clearer conditions.
    Act RulesBills
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    Income from house property: streamlined charging provision and separate business-use exception clarifies taxation and compliance.
    The provision defines the annual value of buildings and appurtenant land owned by the assessee as the charging concept, with the exclusion for portions occupied for business or professional purposes moved into a separate sub section, preserving the substantive tax effect while improving statutory structure and clarity.

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      Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

      24 July, 2024

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

      (i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

      S. No.

      S N of 50/17-Cus

      Brief Description

      1.

      17

      Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

      2.

      80A

      Algal oil for manufacturing of aquatic feed

      3.

      90

      Lactose for use in manufacture of homeopathic medicines

      4.

      104

      Specified goods used in processing of sea-food

      5.

      133

      Gold ores and concentrates

      6.

      139

      Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

      7.

      150

      Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

      8.

      155

      Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

      9.

      164

      Electrical energy supplied from SEZ unit to DTA

      10.

      165

      Electrical energy supplied from SEZ to DTA

      11.

      172

      Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

      12.

      183

      Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

      13.

      184

      Pharmaceutical Reference Standard

      14.

      188

      Goods for manufacture of ELISA Kits

      15.

      191

      Maltol for manufacture of deferiprone

      16.

      204

      Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

      17.

      237

      Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

      18.

      253

      Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

      19.

      257

      Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

      20.

      257A

      Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

      21.

      257B

      Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

      22.

      257C

      Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

      23.

      258

      Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

      24.

      259

      Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

      25.

      260

      Goods for the manufacture of specified orthopedic implants (902110)

      26.

      261

      Raw material for manufacture of Copper-T Contraceptive

      (i) Alatheon

      (ii) Copper Wire

      27.

      265

      Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

      28.

      269

      Super absorbent polymer for manufacture of adult diapers and specified goods

      29.

      271

      Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

      30.

      276

      Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

      31.

      279

      New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

      32.

      280

      New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

      33.

      290

      Wood pulp for manufacture of newsprint, paper or paperboard

      34.

      292

      Goods imported for manufacture of paper, paper boards, newsprint

      35.

      293A

      Newsprint and uncoated paper imported for printing of newsprint

      36.

      296A

      Lightweight coated paper imported by actual users for printing of magazines

      37.

      326

      Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

      38.

      329

      Pile fabrics for the manufacture of toys

      39.

      333

      Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

      40.

      334

      (i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

      41.

      345A

      Simply Sawn Diamonds

      42.

      364A

      Spent catalyst or ash containing precious metals

      43.

      368

      Ferrous Scrap

      44.

      374

      Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

      45.

      375

      Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

      46.

      378

      Metal parts for manufacture of electrical insulators falling under heading 8546

      47.

      379

      Pipes and tubes for use in manufacture of boilers

      48.

      380

      Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

      49.

      381

      Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

      50.

      392

      Dies for drawing metal, where imported after repairs from abroad

      51.

      403

      Parts and raw materials for offshore oil exploration

      52.

      404

      Specified items including capital goods and raw materials for off shore oil exploration

      53.

      415

      Parts for manufacture of catalytic convertors

      54.

      415A

      Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

      55.

      416

      Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

      56.

      417

      Cerium compounds for use in the manufacture of washcoat for catalytic converters

      57.

      418

      Zeolite for use in the manufacture of washcoat for catalytic converters

      58.

      422

      Machinery, electrical equipment for use in semiconductor wafer and LCD

      59.

      423

      Machinery, electrical equipment for use in marking and packaging of semiconductor chips

      60.

      426

      Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

      61.

      435

      Capital goods for printing industry

      62.

      442

      Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

      63.

      446

      Parts and components for manufacture of tunnel boring machines

      64.

      451

      Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

      65.

      462

      Ball screws for use in the manufacture of CNC Lathes

      66.

      463

      Linear Motion Guides for use in the manufacture of CNC Lathes

      67.

      464

      CNC Systems for use in the manufacture of CNC Lathes

      68.

      464A

      Goods for manufacture of plastic processing machineries

      69.

      467

      Parts and components of cash dispenser or automatic bank note dispenser

      70.

      468

      Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

      71.

      471

      All parts for use in the manufacture of LED lights

      72.

      472

      All inputs for use in the manufacture of LED driver or MCPCB for LED lights

      73.

      476

      Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

      74.

      477

      Filming equipment of foreign origin if imported into India after having been exported therefrom.

      75.

      480

      Goods imported for being tested in specified test centers

      76.

      489B

      Goods for manufacturing of Microphones

      77.

      504

      Parts and Components of Digital Still Image Video Cameras

      78.

      509

      Parts, components and accessories for manufacture of Digital Video Recorder

      79.

      510

       Parts, components and accessories for use in manufacture of reception apparatus for television

      80.

      511

      Parts, components and accessories for manufacture of CCTV Camera

      81.

      512

      Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

      82.

      512A

      Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

      83.

      515A

      Open Cell for manufacture of TV Panel

      84.

      516

      The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

      85.

      517

      Magnetrons for manufacture of domestic microwave ovens

      86.

      519

      Raw materials or parts for use in manufacture of e-Readers

      87.

      523A

      Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

      88.

      527

      Lithium-ion cell use in manufacture of battery or battery pack

      89.

      527A

      Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

      90.

      527B

      Lithium-Ion Cell manufacture of battery or battery pack of EV

      91.

      534

      Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

      92.

      535

      Raw materials for manufacture of aircraft and parts of aircraft

      93.

      535A

      Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

      94.

      536

      Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

      95.

      537

      All goods of Heading 8802 (except 88026000-spacecraft)

      96.

      538

      Components or parts, including engines, of aircraft of heading 8802

      97.

      539

      (a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

      98.

      539A

      Scientific and technical instruments etc for launch vehicles and satellites

      99.

      540

      Specified goods imported by scheduled air transporter

      100.

      542

      Specified goods imported by Aero Club, Flying Training Institutes

      101.

      543

      Specified goods imported by non-scheduled air transporter

      102.

      544

      Parts (other than rubber tubes), of aircraft of heading 8802

      103.

      546

      Parts (other than rubber tubes), of aircraft of heading 8802

      104.

      548

      Barges or pontoons imported along with ships

      105.

      551

      Cruise ships, Excursion ships

      106.

      553

      Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

      107.

      555

      Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

      108.

      567

      Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

      109.

      569

      Parts required for manufacture of Ostomy products

      110.

      570

      Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

      111.

      575

      Specified Hospital Equipment for use in specified hospitals

      112.

      578A

      Raw materials, for the manufacture of Cochlear Implants

      113.

      580

      X-Ray Baggage Inspection Systems and parts thereof

      114.

      581

      Portable X-ray machine / system

      115.

      583

      Parts and cases of braille watches, for the manufacture of Braille watches

      116.

      591

      Parts of electronic toys

      117.

      593

      Parts of video games for the manufacture of video games

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

      (ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

      S. No.

      S. No. of 50/2017Cus

      Brief Description

      1.

      212A

      Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

      2.

      213

      Drugs and materials

      3.

      428

      Specified goods imported by accredited press cameraman

      4.

      429

      Specified goods, imported by accredited journalist

      5.

      549

      Capital goods, raw materials and spares for repairs of ocean-going vessels

      6.

      550

      Spare parts and consumables for repairs of ocean going vessels registered in India.

      7.

      577

      Lifesaving medical equipment for personal use

      8.

      607

      Life Saving drugs like Keytruda etc

      9.

      607A

      Lifesaving drugs/medicines for personal use

      10.

      611

      Archaeological artefacts for exhibition in a museum

      11.

      612

      Specified raw material for sports goods

      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