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    Profits in lieu of salary redefined to separate termination, modification, and fund payments with schedule-based exclusions.
    The provision redefines profits in lieu of salary into two subsections: one defining taxable receipts-distinguishing termination payments, modification payments, pre and post employment lump sums, and employer/fund/keyman insurance payments-and the other listing exclusions via schedules. The schedule-based exclusions replace prior cross references to exemption clauses, simplifying identification of non taxable receipts and improving classification and compliance for taxpayers and employers.
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    Perquisite taxation modernisation streamlines valuation, standardises employer contribution limits and revises accommodation and medical exemptions.
    The Bill reorganises and simplifies perquisite provisions by consolidating accommodation rules, removing detailed computation methods in favour of prescribed approaches, and eliminating distinct treatment for furnished and hotel accommodation. It streamlines benefits and amenities by replacing a monetary threshold with prescribed-amount determinations, unifies fund-related rules with a uniform cap on aggregate employer contributions and annual accretion calculations, and retains but modifies medical exemptions by removing the previous reimbursement ceiling and clarifying overseas treatment conditions.
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    Salary definition reform clarifies component categories and statutory references, enhancing transparency and compliance in compensation taxation.
    Clause 16 redefines salary by converting a nine-part scheme into twelve distinct sub-clauses, separating previously combined items like fees, commissions, perquisites and profits in lieu of salary, relocating leave encashment and provident fund references to updated schedules, and updating section cross-references while retaining the substantive tax treatment and adding modern compensation elements such as contributions to the Agniveer Corpus Fund.
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    Deductions from salaries consolidated: restructured standard deduction tiers and unified gratuity, pension and VRS provisions for clarity.
    Clause 19 consolidates salary-related deductions into a single tabular framework, instituting a two-tier standard deduction aligned with a specified tax regime, grouping gratuity types under numbered entries with categorisation and calculation guidance, centralising pension and leave salary provisions with detailed computation rules, consolidating retrenchment compensation with specified limits and conditions, and streamlining Voluntary Retirement Scheme benefits with a defined monetary ceiling and eligible employer criteria to enhance administrative efficiency and taxpayer clarity.
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    Trust settlement taxation: broadened construction of shares and securities may capture partnership interests, prompting citation verification.
    The tribunal examined whether a trust permitting benefits beyond relatives falls within Section 56(2)(x), construed "shares and securities" to broaden taxable scope, and treated partnership interests as property under the provision. The earlier order was recalled after reliance on non-existent citations, highlighting the need for rigorous verification of precedents and research safeguards in trust taxation matters.
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    Salaries taxation clarified: structural reorganisation and retention of substantive tax treatment simplifies employer scope and advance salary rules.
    Clause 15 reorganises salary taxation into discrete subsections, modernises terminology by adopting "tax year," and converts explanations into operative provisions. It limits main clauses to "employer" while separately providing that "employer includes former employer," and elevates the treatments of advance salary and partner remuneration to standalone subsections, preserving existing substantive tax effects while improving statutory clarity.
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    Disallowance of expenditure related to non-taxable income clarified and assessing officer powers streamlined under the new income tax bill.
    Clause 14 preserves the principle that expenditure related to income not forming part of total income is disallowed, sets out a three-part structure-basic disallowance rule, assessing officer authority to verify or apply a prescribed method, and a tax year temporal application-and streamlines language by incorporating the former Explanation into the main provision while omitting provisions on reassessment, rectification references, and retrospective application.
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    Tax exemption for political funding consolidated with stricter documentation, audit and distribution conditions under new clause.
    Clause 12 of the Income Tax Bill, 2025 consolidates exemption rules for political parties and electoral trusts, retaining existing excluded income categories while reorganising eligibility and conditions into Schedule VIII's tabular format. It strengthens documentation, retains the cash-donation cap, expands acceptable non-cash payment modes to account-payee and electronic methods and electoral instruments, mandates timely return filing and enhanced audits, requires electoral trusts to distribute the bulk of aggregate donations to registered parties, and provides for taxation of exempt income where statutory conditions are not met.
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    Deemed transfer of assets triggers tax; Clause 8 adds guideline timelines and enhanced parliamentary oversight for valuation.
    Deemed transfer of capital assets or stock-in-trade on distribution during dissolution or reconstitution constitutes a taxable event with gains measured by fair market value, taxed as business income or capital gains. Clause 8 clarifies terminology, prescribes a limited period for issuing implementation guidelines, introduces parliamentary review and modification procedures, modifies cross-references, and is less explicit about the binding nature of guidelines; specified entities must recognize the deemed transfer and specified persons must maintain valuation documentation.
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    Deemed accrual of income expands India's tax nexus to digital activities and indirect transfers, affecting cross-border taxpayers.
    Clause 9 establishes when income is deemed to accrue or arise in India, categorising taxable flows from Indian assets/sources, property, business connections and transfers of capital assets situated in India, and prescribing specific rules for salary, dividends, interest, royalty and technical service fees, with tailored definitions for software and digital rights, while introducing Significant Economic Presence and attribution rules plus indirect transfer tests and exemptions.
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    Territorial nexus expanded to include significant economic presence, broadening tax scope for digital and cross-border business activities.
    The proposed Clause 9 expands the territorial nexus and refines business connection to include significant economic presence, adds targeted rules for online advertising, data monetization and digital services, and integrates investment fund management rules, creating new compliance obligations for businesses, non-residents and fund managers while aligning with international tax guidelines.
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    Deemed income consolidation simplifies timing and treatment of employee benefits and dividends under the new bill, improving clarity.
    The Bill consolidates rules treating certain receipts as income into one clause, preserving employee-related deemed income categories and provident fund treatment while refining employer-contribution language and updating cross-references. It integrates dividend provisions, maintains the declared versus interim dividend distinction, broadens the dividend definition through updated references, and clarifies unconditional availability of interim distributions, aiming to simplify timing and computation of these receipts and reduce interpretive disputes for tax administration.
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    Residential status reform refines residency tests and deemed resident rules, strengthening clarity for high income individuals and companies.
    The Bill restructures residential status rules to clarify the day count residency framework, refine temporal definitions and exceptions, and expand deemed residency and not ordinarily resident criteria. It adds targeted provisions for high income individuals with a distinct presence test and develops company residency guidance by elaborating the place of effective management and management control factors, aiming to align with international standards and reduce disputes.
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    Apportionment of spousal income: equal division of non-salary income with salary attributed to the earning spouse under Portuguese Civil Code.
    Income of spouses under the Portuguese Civil Code is not assessed as community property; non-salary income is divided equally between spouses while salary income is attributed solely to the earning spouse. Section 5A and Clause 10 maintain individual assessment, require separate inclusion of apportioned shares in each spouse's return, and call for clear income segregation and documentation. Clause 10 simplifies language and removes prior references to classification as an association of persons or body of individuals.
    Act RulesBills
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    Scope of total income clarified: residency tests and foreign income treatment reorganised to improve clarity and administration.
    Clause 5 reorganises the scope of total income by substituting "previous year" with tax year, moving not ordinarily resident treatment into the main clause, and elevating former Explanations into subsections. The Bill preserves the core rules on income received or deemed received in India, income accruing or arising in India, and income accruing outside India, while separately articulating prevention of double inclusion and foreign income treatment to improve clarity and administrative coherence.
    Act RulesBills
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    Commercial activities by non-profits face a revenue cap and mandatory separate accounting, tightening compliance and transparency.
    Clause 346 of the Income Tax Bill, 2025 requires commercial activities by registered non-profit organisations to be directly related to charitable objectives, subjects receipts from such activities to a statutory revenue cap, and mandates separate accounting for those activities. This contrasts with Section 2(15) of the Income-tax Act, 1961, which conditions tax-exempt status on activities being integral to the charitable purpose and a similar receipts ceiling but lacks an explicit separate accounting requirement. The clause emphasizes transparency, documentation, and clearer compliance parameters.
    Case LawsIncome Tax
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    Rectification of assessment orders cannot cure jurisdictional errors where orders name non-existent entities after mergers.
    An assessment order issued in the name of a non-existent entity after a disclosed corporate amalgamation was held to be a fundamental, jurisdictional error not correctable under Section 154 or Section 292B; prior disclosure of the merger and absence of misleading conduct distinguished the case from precedents permitting clerical correction.
    Case LawsIncome Tax
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    Limitation periods: reassessment procedures must be completed within the overarching statutory period, else notices are time-barred.
    The decision construes the interaction between procedural timelines for reassessment and the overarching limitation period, treating the mandatory pre-notice procedure requiring provision of material and an opportunity to respond as part of the reassessment process that must be completed within the ultimate limitation period; if the authority does not complete both the procedural order and issue the reassessment notice within the residual time remaining after statutory exclusions and extensions, the notice is time-barred.
    CircularsGST
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    Effective date conflict between circular and statutory notification underscores primacy of notification over administrative guidance.
    A conflict between Circular No. 247/04/2025 and Notification No. 03/2023 arises from differing statements on the effective date of GST amendments. The circular provides classification and rate clarifications for specified goods and refers to an operative date that diverges from the notification's expressly stated effective date. Because Notification No. 03/2023 is issued under statutory authority and carries legal force, the notification's specified effective date governs where inconsistency with administrative circulars occurs, producing compliance and enforcement uncertainty that warrants authoritative clarification.
    NewsBills
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    Section 115BAC tax regime retained as default; surcharge tiers and caps specified, with marginal relief safeguards.
    The Finance Bill, 2025 retains existing income-tax rates for assessment year 2025-26 and keeps special concessional regimes unchanged. Section 115BAC operates as the default regime for eligible individuals and similar entities unless an option is chosen, with prescribed slab rates applying. The Bill specifies tiered surcharge rates on tax under section 115BAC for higher incomes, caps surcharge on dividend and certain categorized income and for associations of companies, and provides marginal relief. Part III First Schedule provisions for advance tax and withholding are reallocated to Part I for 2025-26.

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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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      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