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companies; conditions claims on prescribed documentation and compliance; protects deductions when approvals are later withdrawn; and contains provisions on non duplication of deductions, depreciation applicability, and amalgamation asset treatment.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.

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.

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.

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.

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.

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.