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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.