Capital gains modernization clarifies valuation and timing for taxation, including insurance recoveries and conversions to stock in trade.
Clause 67 retains the principle that gains from transfer of capital assets are taxable in the year of transfer and refines valuation and timing for specified situations: insurance recoveries are treated as capital gains with fair market value deemed as full consideration; unit linked insurance receipts are aligned with capital gains rules where exemptions do not apply; conversion to stock in trade uses fair market value at conversion as consideration and taxes gains when sold; beneficial interests in securities are attributed to the beneficial owner with FIFO cost and holding period rules.

Tax deductions in co operative bank reorganisations: allocation rules and book value transfers ensure continuity and fairness in taxation.
Clause 65 and Section 44DB set a special provision for computing tax deductions in co operative bank reorganisations by allocating deductions between predecessor and successor based on days before and after reorganisation, requiring transfers at book values, defining covered reorganisations by asset/liability transfer and continuity criteria, and providing for Central Government notification in specified cases to ensure genuine business purposes.

High-turnover businesses must provide prescribed electronic payment facilities to increase transaction traceability and tax transparency.
Clauses 64 and 187 of the Income Tax Bill, 2025 require persons carrying on business above the prescribed turnover threshold to provide facilities for accepting payments through prescribed electronic modes, in addition to any other electronic methods offered. These clauses parallel Section 269SU of the Income Tax Act, 1961, aiming to promote digital transactions, enhance traceability, and reduce tax evasion by imposing infrastructure and compliance obligations on high-turnover businesses.

Tax audit thresholds updated to emphasise digital transactions, altering audit triggers and filing timing for taxpayers.
Clause 63 updates mandatory tax audit triggers by revising turnover and receipt thresholds and by making the intensity of banking or online transactions decisive for higher audit thresholds; it maintains an audit requirement for professionals, preserves exemptions where declared profits align with deemed profit provisions, requires audit reports signed by an accountant and filed by the defined specified date, and allows reliance on audits under other laws if submitted on time.

Maintenance of books of account: updated thresholds and technological recordkeeping govern taxpayer record obligations for income verification.
Clause 62 modernizes maintenance of books of account by applying to specified professions and notified persons, updating income and turnover thresholds (with special treatment for individuals and HUFs), defining specified professions broadly, and empowering the Board to prescribe the types, form, manner and retention periods of records while encouraging technological methods of record-keeping to facilitate income verification and tax administration.

Presumptive taxation for non-residents fixes sectoral deemed profit rates and permits audit-based lower profit declaration.
Clause 61 establishes a special presumptive computation regime for specified non-resident business activities-shipping (including demurrage), cruise ships, aircraft operation, turnkey power project construction, mineral-oil services, and specified electronics services-by prescribing sectoral deemed profit rates as the taxable base, permitting non-residents to elect audit-based lower declared profits if they maintain detailed books and undergo audit, and restricting allowance of losses, deductions, and depreciation against the presumptively computed income.

Head office expenditure deductions limited by an adjusted total income cap, simplifying cross-border allocation and documentation requirements.
Clause 60 permits deduction of administrative costs incurred by non-resident head offices against profits and gains of business or profession, subject to a capped proportion of adjusted total income (or its average when losses occur) and to specified definitions of head office expenditure, thereby standardizing computation and limiting disproportionate reductions in taxable income.

Taxation of royalties and technical service fees: non resident receipts taxed as business profits if effectively connected to a permanent establishment.
Clause 59 charges royalties and fees for technical services received by non residents as Profits and gains of business or profession when receipts from the Government or an Indian concern arise under an agreement, the assessee carries on business in India through a permanent establishment or fixed place of profession, and the rights, property or contract are effectively connected with that presence; deductions are limited to expenses wholly and exclusively for the Indian establishment and books of account and audit are required.

Presumptive taxation for goods carriages simplifies reporting for small fleet owners while limiting deductions and requiring records.
Clause 58 establishes a presumptive basis for computing profits from plying, hiring or leasing goods carriages by applying prescribed per-vehicle rates, permitting declaration of higher actual income, allowing specified partner salary and interest deductions for firms, requiring books and audit where declared income is lower than the presumptive amount, disallowing other deductions against presumptive income, and treating written down value as if depreciation were claimed and allowed.

Presumptive taxation for professionals deems a portion of gross receipts as taxable income, simplifying compliance but restricting deductions.
Clause 58 institutes a presumptive taxation scheme for specified resident professionals, prescribing turnover-based eligibility and deeming taxable income at a fixed proportion of gross receipts or actual profit, whichever is higher. Eligible taxpayers are generally relieved from routine accounting and audit obligations, but must maintain books and undergo audit if they claim profits lower than the presumptive amount. Deductions or losses are not permitted against the presumptive income, and depreciation is to be treated as if claimed and allowed. Certain entity types are excluded from the scheme.

Presumptive taxation scheme differentiates rates by transaction mode and imposes a five-year lock-in to simplify compliance.
Clause 58 permits computation of presumptive income for eligible small businesses and professions with turnover-based eligibility, distinguishes presumptive rates by mode of receipt, allows actual profit to be claimed if higher, mandates books and audit where actual profits are lower and total income exceeds the basic exemption, and imposes a five-year lock-in for continued application of the scheme.

Revenue recognition requires percentage-of-completion for construction and service contracts, with completion or straight-line service options.
Clause 57 mandates the percentage of completion method for construction and service contracts, with a project completion alternative for short-term services and a straight-line option for recurring service arrangements. Contract revenue includes retention money, and contract costs must not be reduced by incidental income such as interest, dividends, or capital gains. The provision references notified accounting standards and aims to align revenue recognition with international practices while imposing compliance and disclosure obligations.

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.