Taxation of interest income: interest on bad or doubtful debts is taxable when credited or received, whichever is earlier.
Clause 56 makes interest income on bad or doubtful debts of specified financial institutions taxable in the year it is credited to the profit and loss account or actually received, whichever is earlier, defines specified institutions to include public financial institutions, scheduled and certain cooperative banks, State Financial Corporations, State Industrial Investment Corporations and notified NBFCs, and links the classification of bad or doubtful debts to categories prescribed under Reserve Bank of India guidelines.

Insurance business taxation uses a new dedicated schedule, changing computation and overriding conflicting provisions sector.
A distinct, self contained computation regime requires insurers, including mutual insurance companies and co operative societies, to compute profits and gains using a designated industry specific schedule; this regime expressly overrides general provisions to provide a uniform, tailored method that aligns tax accounting with insurance operations and streamlines compliance and administration.

Deductions for trade associations enable relief for member contribution shortfalls under a new statutory provision and prioritize loss carryforward.
Clause 50 permits a special deduction for specified trade, professional or similar associations when member-derived income is less than expenditure for members' common interests. The deduction is capped at fifty percent of total income before deduction and is available only after applying carry forward and set off provisions. Income includes subscriptions but excludes specified service remuneration; expenditure excludes capital and other deductible expenses. Eligibility is narrowed by exclusions in Schedule III and by restrictions on income distribution to members, and substantiation through accurate records is required.

Full value of consideration deemed as stamp duty value where declared consideration is lower, affecting business income taxation.
Clause 53 deems the stamp duty value to be the full value of consideration for transfers of land or buildings when stamp duty value exceeds declared consideration, subject to exceptions where the stamp duty value falls within a prescribed margin above consideration, allowance for stamp duty value as of the agreement date when agreement and registration dates differ, conditions tied to receipt of consideration through prescribed banking or electronic modes before the agreement date, and reference to statutory value-determination rules.

Cost of acquisition rules align transferee basis with transferor cost, including improvements and transfer expenditures to ensure tax consistency.
Special provisions set the transferee's cost of acquisition equal to the transferor's cost, include improvements and expenditures wholly and exclusively incurred in connection with the transfer, and require recordkeeping; Clause 40 expressly excludes assets under section 67(6), while Section 43C similarly treats improvements and transfer expenditures with an explicit reference to gift-tax and a historical temporal application.

Actual payment requirement for tax deductions: only payments made qualify, with specific rules protecting small suppliers.
Specified deductions are allowable only in the year when actual payment is made, irrespective of accounting method or liability year. Deductible items include taxes, employer welfare fund contributions, leave payments, interest to defined financial entities, payments for asset use, and delayed payments to micro and small enterprises. Payments made after the year-end but before return filing remain deductible; conversions of interest into loans are not treated as payment. Employer contributions are eligible while employee receipts are excluded, and a deduction already claimed in the liability year cannot be claimed again when paid.

Taxation of foreign exchange fluctuation standardizes treatment of gains and losses under updated income computation standards.
Taxation of foreign exchange fluctuation treats gains or losses from changes in foreign exchange rates on foreign currency transactions as taxable income or loss, to be computed under the income computation and disclosure standards referenced in clause 276(2), and applies to monetary and non monetary items, translation of foreign operations' financial statements, forward exchange contracts, and foreign currency translation reserves.

Foreign exchange fluctuation capitalisation changes asset cost computation, requiring exchange rate variations to be added to or deducted from acquisition cost.
Clause 42 requires capitalization of foreign exchange fluctuations into the cost of assets: an overriding rule mandates accounting for exchange rate variations; the variation is computed as the amount paid in domestic currency less the liability at acquisition; that variation is added to or deducted from the asset's actual cost; where contracts with authorised dealers exist, the contract exchange rate governs measurement, and foreign exchange law is incorporated for definitions and consistency.

Amortisation of expenditure allows staged tax deduction for mineral prospecting expenses with carry-forward and anti-double-deduction safeguards.
Clause 51 establishes a regime permitting amortisation of qualifying prospecting and mine-development expenses for Indian companies and resident individuals by allowing an annual deduction of one-tenth of the specified expenditure over ten tax years from the year of commercial production. It limits eligible expenditure to amounts incurred in the year of commercial production and the four preceding years, excludes acquisition costs of mineral sites and depreciable capital assets, bars double claims under other provisions, permits carry-forward within the ten-year ceiling, and requires audited accounts for non-corporate claimants.

Deductions for oil exploration clarify eligibility, government agreements and transfer treatment under new tax clause.
Clause 54 establishes a tax framework for prospecting for mineral oils by permitting deductions for pre commercial production expenses and depletion of mineral oil, defining specified oil exploration business and including petroleum and natural gas as mineral oil, and requiring agreements with the Central Government to be laid before Parliament. It prescribes deduction interplay with other allowances and specifies tax treatment on business transfers, cessation during transfer year, and applicability on amalgamation or demerger.

Written down value reforms standardize WDV computation and clarify depreciation and block asset adjustments under the new tax provision.
Clause 41 prescribes a standardized method for computing the written down value of depreciable assets: assets acquired in the tax year are valued at actual cost; earlier-acquired assets at cost less depreciation allowed; blocks of assets by the formula [(A-D)+B-C]-E; carried-forward depreciation is deemed allowed; adjustments are required for years where total income was not computed; mixed agriculture-business income is treated as business for depreciation; and the term "sold" is referenced to the Act for consistency.

Computation of actual cost updated to exclude subsidies and non-banking payments, tightening asset valuation for tax purposes.
Clause 39 redefines actual cost for depreciation by reducing asset cost for amounts met by others, GST credits, additional duties and subsidies; excluding certain non-banking payments; providing a formula for indirect subsidy apportionment; specifying treatment in amalgamation, demerger and asset conversion; empowering assessing officers with supervisory approval to determine cost in avoidance cases; and defining special acquisition modes for transfer clarity.

Modernizing business income definitions clarifies taxable profit scope and aligns terms with contemporary financial instruments.
Clause 66 revises key definitions for computing income under Profits and Gains of Business or Profession, broadening terms like agreement, specifying classifications for banking and housing finance companies, updating the scope of plant, refining fees for technical services, and narrowing the definition of speculative transactions with exceptions for bona fide hedging and specified derivatives; these updates modernise earlier Section 43 concepts to align with electronic payment modes, contemporary derivatives, and non cash considerations to reduce ambiguity in tax assessments.

Deemed business income: expanded scope taxes benefits from remission, asset disposals and successors' receipts under new Clause 38.
Clause 38 deems specified sums as profits and gains of business or profession where deductions or allowances were earlier claimed, covering cessation or remission of trading liabilities, excess proceeds on disposal of assets over written down value, sale of research capital assets, recovery of bad debts, and withdrawals from special reserves; it conditions taxability on prior allowance, permits loss set off for ceased businesses, defines key terms and extends liability to successors and post cessation situations.

Non-deductibility of excessive payments: reinforces banking-mode payment rules and limits unreasonable related-party deductions.
Clause 36 empowers disallowance of deductions for payments deemed excessive or unreasonable to specified persons by reference to fair market value and business need, treats related disallowed deductions as income where previously claimed, and conditions deductibility on payments above prescribed thresholds being made through specified banking or online channels while providing limited exceptions for business expediency.

Business deductions clarify allowable expenses, limiting interest capitalization and setting conditions for reserves and bond discounting.
Clause 32 specifies allowable business deductions including bona fide bonuses or commissions, capitalization of interest until asset use, pro rata discount deduction for zero coupon bonds, conditional deductions for contributions to credit guarantee funds and statutory corporation expenditures, limits on special reserves for financial entities, deduction of marked to market losses under prescribed standards, phased family planning capital deductions, agricultural purchase deductions within government price limits, animal loss adjustments, and transaction tax deductions where trading forms part of business income.

Non-deductibility of expenses: new clause tightens TDS compliance, equalisation levy and partnership deduction limits.
Clause 35 of the Income Tax Bill, 2025 prescribes categories of business or professional expenditures that are non-deductible, confirming taxes on income and related imposts are not deductible, disallowing deductions where TDS was not deducted or paid (subject to later allowance upon payment), denying deduction for cross-border salary payments lacking TDS compliance, treating equalisation levy and state-imposed charges as non-deductible, and conditioning deductions in partnerships and associations on authorization and prescribed limits to reinforce compliance and prevent tax avoidance.

Apportionment of deductions clarifies business use limits and streamlines depreciation rules under the new income tax framework.
Clause 28 limits deductions for rent, local taxes, insurance and repairs to amounts wholly and exclusively for business use and permits apportionment by the Assessing Officer where use is mixed; Clause 33 creates a structured depreciation regime for tangible and intangible assets (excluding goodwill) including block of asset calculations, special provisions for new machinery and power generation assets, short use treatment, and rules on successor transactions.

Business expenditure deductions: exclusions tightened to bar CSR, political ads, and payments tied to unlawful conduct.
Clause 34 requires that only expenditures incurred wholly and exclusively for business purposes, not of a capital or personal nature and not falling within specified exclusions, are deductible. It expressly disallows deductions for expenditures linked to offenses or prohibited activities, corporate social responsibility obligations, and political-advertisement costs, and clarifies that benefits, perquisites, compounding payments, and settlements related to unlawful conduct are non-deductible.

Business income deductions clarified and modernized, expanding allowable items and tightening conditions for claiming them.
Clause 32 prescribes a list of allowable other deductions for business income computation, covering employee bonuses and commissions, interest on borrowed capital (with exclusions until assets are in use), contributions to specified credit guarantee funds, pro rata discount on zero coupon instruments, amounts carried to special reserves by defined financial entities, non-capital expenditure by notified statutory corporations, cooperative society purchase expenditure, marked to market or expected losses, family planning expenditures by companies, cost of animals used in business adjusted for carcass receipts, and transaction taxes where income is included in business profits.