Loading...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Act Rules Bills
    Redefining the Bar of Limitation for Tax Penalties : Clause 472 of the Income Tax Bill, 2025 Vs. Sec...
    Act Rules Bills
    Natural Justice and Administrative Oversight in Tax Penalties : Clause 471 of the Income Tax Bill, 2...
    Act Rules Bills
    Doctrine of Reasonable Cause in Tax Penalties : Clause 470 of the Income Tax Bill, 2025 Vs. Section ...
    Act Rules Bills
    Voluntary Disclosure and Penalty Waiver under Indian Tax Law : Clause 469 of the Income Tax Bill, 20...
    Act Rules Bills
    Penalties for Non-Compliance with TDCAN/TAN Requirements : Clause 468 of the Income Tax Bill, 2025 V...
    Act Rules Bills
    Penalty Provision for PAN/Aadhaar Non-Compliance in Indian Tax Law : Clause 467 of the Income Tax Bi...
    Act Rules Bills
    Penalty Provisions for deterrence against non-cooperation with tax authorities : Clause 466 of Incom...
    Act Rules Bills
    Procedural Defaults and Penalties in Indian Tax Law : Clause 465 of the Income Tax Bill, 2025 Vs. Se...
    Act Rules Bills
    Ensuring Compliance Among Tax-Exempt Entities : Clause 464 of the Income Tax Bill, 2025 Vs. Section ...
    Act Rules Bills
    Professionals(i.e. Accountant, Marchant Banker, Registered Valuer) Accountability under Indian Incom...
    Act Rules Bills
    Enforcement of Information Disclosure in Cross-Border Transactions : Clause 462 of the Income Tax Bi...
    Act Rules Bills
    Penalty Provisions for Non-Filing and Incorrect Filing of TDS/TCS Statements : Clause 461 of the Inc...
    Act Rules Bills
    Enforcement of Reporting Obligations by a non-resident having liaison office : Clause 460 of Income ...
    Act Rules Bills
    Penalties for Reporting Non-Compliance by Resident constituent entity of an international group unde...
    Act Rules Bills
    Legal Implications of Non-Compliance with Reporting Requirements : Clause 458 of the Income Tax Bill...
    Act Rules Bills
    Strengthening Transfer Pricing Enforcement : Clause 457 of the Income Tax Bill, 2025 Vs. Section 271...
    Act Rules Bills
    Compliance and Penalty Mechanisms for Investment Funds under Indian Tax Law : Clause 456 of the Inco...
    Act Rules Bills
    Penalties for Inaccurate Financial Reporting under Indian Income Tax Law : Clause 455 of the Income ...
    Act Rules Bills
    Penalties for Non-Compliance in Financial Transaction Reporting : Clause 454 of the Income Tax Bill,...
    Act Rules Bills
    Penalty Provisions for Non-compliant Loan Repayments in India's Income Tax Law : Clause 453 of the I...
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

Notes
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
Act Rules Bills
Show AI Summary
Limitation period for tax penalties: quarter based uniform timeline aligns penalty orders with assessment and appellate outcomes.
Clause 472 standardises the limitation for imposing tax penalties by prescribing a uniform six month period measured from the end of the quarter tied to the completion of proceedings, appellate or revisional orders, or issuance of a penalty notice; it permits revision of penalty orders to reflect subsequent assessment modifications, mandates a reasonable opportunity to be heard before adverse penalty action, and excludes rehearing and judicial stay periods from limitation computation.
Act Rules Bills
Show AI Summary
Natural justice in tax penalties: hearing rights and hierarchical approval govern imposition and administrative oversight under new bill.
Clause 471 requires that no penalty be imposed without the assessee being heard or given a reasonable opportunity, mandates prior Joint Commissioner approval for penalties exceeding specified officer thresholds, and requires that penalty orders passed by authorities other than the Assessing Officer be sent to the Assessing Officer. It mirrors core safeguards of the existing law but omits scheme enabling provisions for faceless, technology driven procedures and transitional rules, creating potential uncertainties over thresholds, definition of reasonable opportunity, procedural delays, and modernization.
Act Rules Bills
Show AI Summary
Reasonable cause defense protects taxpayers from penalties for bona fide, non culpable defaults and encourages documented compliance.
Clause 470 creates an exception to specified penalty provisions: no penalty shall be imposed if the assessee proves there was reasonable cause for the failure. It functions as a non obstante provision covering enumerated sections, shifts the burden of proof to the taxpayer, and is aimed primarily at bona fide procedural or technical lapses rather than deliberate violations.
Act Rules Bills
Show AI Summary
Voluntary disclosure and penalty waiver enable administrative relief when pre detection disclosure, cooperation and payment conditions are met.
Clause 469 empowers the Principal Commissioner or Commissioner to reduce or waive penalties under section 439 where a taxpayer has made a full and true voluntary disclosure before detection, cooperated in assessment and paid or arranged payment of tax or interest; it includes a deeming rule for full disclosure, prior approval safeguards for high value cases, a bar on multiple reliefs, a genuine hardship route with recorded reasons, a twelve month disposal limit, opportunity to be heard, and finality of orders.
Act Rules Bills
Show AI Summary
Penalty for failure to quote TDCAN/TAN: discretionary fixed sanctions apply for non compliance and knowingly false quoting.
Clause 468 empowers the Assessing Officer to impose a fixed monetary penalty for failure to comply with Section 397 and for quoting a false Tax Deduction and Collection Account Number in prescribed documents where the person knows or believes it to be false, making the penalty discretionary and imposing a mens rea requirement for false quoting while not expressly providing for a statutory opportunity of being heard.
Act Rules Bills
Show AI Summary
PAN/Aadhaar compliance: new per-default penalty regime distinguishes intentional false quoting from strict liability omissions and extends responsible person liability.
Clause 467 establishes a per-default penalty regime for non-compliance with section 262, differentiating intentional false PAN/Aadhaar quoting-which requires proof of knowledge or belief-from omissions treated as strict liability, and extends liability to persons responsible for ensuring correct quoting/authentication; it emphasizes authentication and digital e KYC integration while remaining silent on express procedural safeguards such as the opportunity to be heard, creating potential due process and transitional issues.
Act Rules Bills
Show AI Summary
Penalty for non cooperation: new provision allows senior tax officers to impose a moderate monetary penalty without explicit hearing safeguards.
Clause 466 empowers specified senior tax officers to impose a moderate monetary penalty for failure to comply with section 254, mirroring prior penalty structure in authority and capped quantum but omitting express procedural safeguards such as an opportunity of being heard, defences like reasonable cause, and a requirement to record reasons, thereby raising concerns about procedural fairness and consistency in imposition.
Act Rules Bills
Show AI Summary
Penalty for procedural defaults: fixed and daily fines, capped to tax collectible, with delegated authority to impose them.
Clause 465 creates a penalty regime for procedural non compliance under the Income Tax Bill, 2025: a fixed penalty for discrete defaults, a daily penalty for continuing defaults, a cap tying certain penalties to the amount of tax deductible or collectible, and specified authorities empowered to impose penalties; it broadens the definition of income tax authority and updates cross references to the restructured Bill, while notably omitting an explicit provision requiring an opportunity to be heard before penalty imposition.
Act Rules Bills
Show AI Summary
Penalty regime for failure to furnish prescribed statements strengthens compliance under tax exempt reporting obligations.
A statutory penalty regime targets failure by specified research institutions and charitable funds to furnish prescribed documents, statements, or certificates within prescribed timeframes; penalties fall within a prescribed band and are imposed at the discretion of the Assessing Officer, operating as a civil compliance measure alongside general procedural safeguards and requiring stakeholders to update compliance processes to align with re referenced substantive sections.
Act Rules Bills
Show AI Summary
Professional accountability: penalty for furnishing incorrect information in professional reports or certificates under the new income tax bill.
Clause 463 imposes a strict-liability penalty regime on accountants, merchant bankers and registered valuers for furnishing incorrect information in any report or certificate under the Act or rules. It prescribes a fixed per-instance monetary penalty and empowers the Assessing Officer, Joint Commissioner (Appeals) or Commissioner (Appeals) to impose the penalty upon satisfaction that incorrect information was furnished. The clause updates definitional references for valuers, omits an explicit definition of "accountant," and operates without prejudice to other civil or criminal consequences.
Act Rules Bills
Show AI Summary
Penalty for failure to furnish information: fixed sanction for inaccurate or missing cross-border disclosure, raising proportionality concerns.
Clause 462 penalises any person required to furnish information under section 397(3)(d) who fails to supply such information or furnishes inaccurate information; the Assessing Officer may impose a fixed monetary penalty, the provision mirrors Section 271I in structure and intent, lacks an express reasonable-cause defence or gradation of penalty, and raises interpretative issues as to the scope of "inaccurate information," procedural safeguards, and proportionality in enforcement.
Act Rules Bills
Show AI Summary
Penalty for failure to furnish statements: discretionary fines with short grace period where tax is paid and statement filed promptly.
Clause 461 creates a penalty for failure to deliver statements under section 397(3)(b) or for furnishing incorrect information, authorising the Assessing Officer to impose a discretionary monetary penalty equivalent in range to the existing Section 271H. Clause 461(2) exempts penalty where tax, fee and interest are paid to the Central Government and the statement is filed within a short grace period, thereby balancing deterrence with relief for prompt substantive compliance while leaving procedural safeguards and definitions, such as "incorrect information," unclearly specified.
Act Rules Bills
Show AI Summary
Penalty for failure to submit statements may be imposed by the assessing officer as a daily or capped sanction, discretion preserved.
Clause 460 permits the Assessing Officer to impose discretionary monetary penalties on any person required to furnish a statement under section 505 for failure to file within the prescribed period, using a two-tier structure of a daily sanction for short-term delay and a capped penalty for longer default, with applicability dependent on the scope of the parent reporting obligation and subject to the general procedural and appellate framework of the tax law.
Act Rules Bills
Show AI Summary
Reporting penalties: new clause preserves escalating daily fines and a large fixed penalty for inaccurate international tax reports.
Clause 459 establishes a tiered penalty regime under section 511 for reporting entities: daily penalties for failure to furnish reports, daily penalties for failure to produce information after the allowed period, an escalated daily penalty if default continues after service of a penalty order, and a substantial fixed penalty for furnishing inaccurate information or failing to correct known or discovered inaccuracies. The prescribed authority under section 511 is empowered to impose these penalties, and the clause mirrors Section 271GB in quantum and triggers while raising issues about reasonable cause relief and procedural safeguards.
Act Rules Bills
Show AI Summary
Penalty for failure to report transfers of management or control triggers significant compliance and enforcement consequences.
Clause 458 creates a penalty for failure by an Indian concern to furnish information or documents under section 506, authorising the prescribed income-tax authority to impose either a transaction-value-based penalty where a transaction effects a direct or indirect transfer of management or control, or a fixed monetary penalty otherwise, and otherwise mirrors the substantive framework and enforcement objectives of Section 271GA of the Income-tax Act, 1961.
Act Rules Bills
Show AI Summary
Transfer pricing documentation penalty: failure to furnish documents leads to transaction value based penalties and enforcement by tax authorities.
Failure to furnish prescribed transfer pricing information or documentation for international or specified domestic transactions triggers a transaction value based penalty under Clause 457, enforceable by the Assessing Officer, authorised Transfer Pricing Officer and the Commissioner (Appeals); the clause ties this enforcement directly to the obligations in section 171(2) and raises interpretive issues concerning the meaning of failure, computation of transaction value, overlap with other penalties, and the availability of a reasonable cause defence.
Act Rules Bills
Show AI Summary
Penalty for failure to furnish statements: eligible investment funds face a fixed sanction under the bill; authority may impose it.
Clause 456 imposes a fixed penalty where an eligible investment fund fails to furnish required statements or information within the prescribed time; the prescribed income-tax authority may direct payment of the fixed sanction. The reporting deadline is set by the substantive eligibility reporting provision; the penalty is discretionary rather than automatic, lacks a graded scale, and does not expressly specify procedural safeguards such as criteria for discretion or an opportunity to be heard.
Act Rules Bills
Show AI Summary
Penalty for inaccurate financial reporting imposes institutional and account-holder liability while enabling recovery of penalties from account holders.
Clause 455 mandates penalties for persons required to furnish statements of financial transactions or reportable accounts for providing inaccurate information or failing to meet due diligence obligations, and imposes an additional per-account penalty on reporting financial institutions where inaccuracies stem from account-holder-supplied false information; reporting institutions may recover such additional penalties from the responsible account holders by direct recovery or retention of funds, with imposition directed by the prescribed income-tax authority and substantive continuity with the former Section 271FAA.
Act Rules Bills
Show AI Summary
Penalty for failure to furnish financial transaction statements - escalating daily sanctions for continued non-compliance after notice.
Clause 454 creates a statutory penalty regime for failure to furnish a statement of financial transaction or reportable account, prescribing a daily penalty accruing from the date the filing deadline lapses, with an escalated daily rate where default continues after a formal notice, and vesting discretionary imposition authority in the income-tax authority subject to procedural safeguards and rights to challenge.
Act Rules Bills
Show AI Summary
Penalty for non-compliant loan repayments: Assessing Officer may impose a penalty equal to the amount repaid for procedural breaches.
Clause 453 permits the Assessing Officer to impose a penalty equal to any loan, deposit or specified advance repaid in contravention of section 188, applying to all persons and covering repayments made by non-transparent modes. The provision creates strict liability based on procedural breach rather than mens rea, centralizes enforcement with the Assessing Officer, and omits an explicit reasonable-cause defence, raising potential interpretative and transitional issues regarding the scope of specified advances and procedural safeguards.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Back

All TMI Notes

Comparison of Section 73 "Cost with reference to certain modes of acquisition" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

29 August, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

Section 73 Cost with reference to certain modes of acquisition.

Income-tax Act, 2025

At a Glance

Document: Clause 73 of the Income Tax Bill, 2025 (Old Version). It sets out deemed cost-of-acquisition rules for specified modes of acquisition of capital assets. The provision affects taxpayers (transferors/transferees, companies, mutual funds, trusts), and tax administration in determining capital gains. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hook: Clause 73 of the Income Tax Bill, 2025. The clause prescribes deemed cost of acquisition for capital assets that become the property of an assessee by various modes (gift, succession, liquidation distribution, trust transfers, specified transfers u/s 70(1) variants, demerger, consolidation of mutual funds, conversion in LLP, etc.). The clause sets out a Table with 24 serial entries mapping specific acquisition scenarios (column B) to the deemed cost of acquisition (column C).

Definitions/explanations within the clause: Sub-section (2) defines "previous owner of the property" for serial number 1; it adopts SEBI Circular definitions for "main portfolio", "segregated portfolio" and "total portfolio" for serial numbers 11 and 12; it defines "net worth" for serial numbers 14 and 15; and it provides that certain provisions (serial numbers 2, 14 and 15) shall, as far as may be, also apply to business reorganisation of a co-operative bank as referred to in section 65.

Statutory Provision Mode

Text & Scope

The clause covers multiple modes whereby an assessee acquires capital assets and specifies the deeming rule for cost of acquisition in each scenario. Core categories include acquisition by gift/will/succession/liquidation/trust, corporate reorganisations (amalgamation, demerger, exchanges under specific section 70(1) heads), mutual fund consolidations/segregations, conversion of LLP interests, redemption of GDRs, transfers involving Electronic Gold Receipts, units of business trusts, assets declared under the Income Declaration Scheme, assets where value was subject to transfer pricing u/s 92(2)(m), and assets of trusts/institutions where accreted income was computed u/s 352.

Interpretation

The clause adopts a principle of continuity of cost: when an asset passes to an assessee by specified non-purchase modes, the cost is generally the cost to the previous owner (often adjusted for improvements). For certain specified assets (e.g., amalgamation, demerger, segregated portfolios, consolidations), the clause prescribes formulaic apportionment or special rules to determine cost. For some categories (specified securities/sweat equity and assets declared under a prior disclosure scheme), fair market value is adopted as the relevant cost.

Legislative intent suggested by text: to ensure tax neutrality in non-market transfers by preserving the prior owner's cost base (or substituting an objective market value where appropriate), and to provide clear mechanical rules for corporate reorganisations and fund restructurings. (Legislative history or policy rationale beyond the text: Not stated in the document.)

Exceptions/Provisos

No separate provisos are present beyond the Table and sub-section (2) clarifications. Specific carve-outs are embedded in entries (e.g., some entries only apply to shares of amalgamating companies, or to specified securities referred to in a particular section). Thresholds or monetary limits: Not stated in the document.

Illustrations

  • Example 1: A person receives shares by inheritance (serial 1). Deemed cost = cost for which the previous owner acquired the shares, increased by cost of improvements incurred by either the previous owner or the assessee.
  • Example 2: A mutual fund segregates a portfolio (serial 11). The cost of acquisition of units in the segregated portfolio is computed using X = A x B / C where A = cost of acquisition of units in total portfolio; B = NAV of asset transferred to segregated portfolio; C = NAV of total portfolio immediately before segregation.
  • Example 3: Shares acquired by a non-resident on redemption of GDRs (serial 6). Deemed cost = price of the shares on a recognised stock exchange on the date of request for redemption.

Interplay

The clause expressly cross-references numerous other provisions (various heads of section 70(1), section 17(2), section 67(14), section 352, section 92(2)(m), section 26(2)(j), SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160). Interaction with those provisions is integral: the deemed cost outcomes depend on definitions and triggers in those sections and the SEBI circular. Other interactions (e.g., with capital gains indexing rules, cost inflation index, or exemptions) are Not stated in the document.

Differences between the two provisions and practical impact

  • Reference to section on specified securities/sweat equity (Table entry 4): Bill (Clause 73) cites section 17(2); Act (Section 73) cites section 17(1)(d).
    • Practical impact: The amendment in the Act changes the statutory anchor for which category of specified securities or sweat equity shares the deemed cost rule applies. This can affect which instruments are valued at fair market value for cost purposes. (Precise reach of the change: Not stated in the document.)
  • Exclusion in entry regarding shares in a project (Table entry 20): Bill refers to "Capital asset, being share in the project, in the form of land or building, or both, u/s 67(14)"; Act adds the qualification "not being a capital asset referred to in section 67(16)".
    • Practical impact: The Act narrows the entry by excluding assets covered by section 67(16), thereby limiting the scope of the deemed cost rule under this entry. This reduces unintended coverage for assets specifically carved out by section 67(16). (Further detail: Not stated in the document.)
  • Provision for accreted income / fair market value reference (Table entry 21): Bill cites computation and tax paid as per section 352 and uses section 352(3) for the specified date; Act cites section 352 and uses section 352(2) for the specified date.
    • Practical impact: The Act shifts the cross-reference to a different sub-paragraph of section 352 for the relevant date when fair market value was considered for computation of accreted income. This may change the precise valuation date or procedural reference for trusts/institutions. (Exact date/implication: Not stated in the document.)
  • Formulation of formulae and minor drafting differences (Table entries 11 and 14): Bill expresses formulas as "X = A x B /C" and in entry 11 uses "immediately before segregation"; Act sets out formula in a two-line presentation "X = A x B / C" with explanatory punctuation and uses "immediately before segregation of portfolios" (slightly fuller wording).
    • Practical impact: These are drafting and clarity differences; the mathematical operation appears identical. The Act's fuller wording may reduce ambiguity about the temporal reference ("immediately before segregation of portfolios").
  • Wording differences in reduction language for original units/shares (Table entries 12 and 15): Bill uses shorter phrasing ("The cost of acquisition as reduced by..."; "As reduced by..."); Act uses fuller phrasing ("The cost of acquisition of such original units as reduced by..." and "The cost of acquisition of such original shares as reduced by...").
    • Practical impact: Primarily stylistic; the Act's phrasing is marginally clearer on subject of reduction being applied to the cost of acquisition of the original asset.
  • Cross-reference to cooperative bank business reorganisation (sub-section (2)(d)): Bill refers to section 65; Act refers to section 64.
    • Practical impact: The Act alters which section governs application "as far as may be" to co-operative bank reorganisations. This may change whether the listed rules apply to such reorganisations (scope depends on the substantive content of sections 64/65, which is Not stated in the document).
  • Minor wording elsewhere (e.g., serial 3 wording "in relation to which such asset is acquired by the assesse" in Act vs "for which such asset is acquired by the assesse" in Bill):
    • Practical impact: These are drafting refinements likely intended to improve grammatical clarity; they do not, on the face of the text, alter substantive effect.

Practical Implications

  • Compliance and risk areas: Taxpayers receiving assets by non-purchase modes must trace the previous owner's cost of acquisition (serial 1). Where assets arise from reorganisations, taxpayers and advisers must apply the prescribed formulae to apportion cost (serials 11, 14). For instruments where fair market value is prescribed (serials 4, 17, 18, 21, 22), appropriate documentation of valuation date and valuation method is necessary. The clause delegates some definitional matters (e.g., SEBI definitions), so reliance on external circulars is required.
  • Record-keeping/evidence points: Maintain purchase records of previous owners where available; documents substantiating improvements; NAV statements and contemporaneous valuation data for mutual fund reorganisations; stock exchange prices on specified dates (e.g., GDR redemption date); records of tax paid and valuation dates u/s 352; records of disclosure and payment under the Income Declaration Scheme, 2016 where invoked.

Key Takeaways

  • Clause 73 prescribes deemed cost of acquisition rules for a wide range of non-market transfers and restructurings.
  • General rule: the prior owner's cost (plus improvements) is carried forward in most non-purchase acquisitions.
  • Specific categories (amalgamation, demerger, segregations, consolidations) require mechanical apportionment/formulae to determine cost.
  • Certain instruments/assets use fair market value or market price on a specified date as deemed cost.
  • The clause cross-references several statutory provisions and a SEBI circular; precise application depends on those external texts.
  • Taxpayers must preserve evidence of prior costs, improvements, NAVs, market prices and valuation dates to support cost calculations.
  • Where the Bill uses concise phrasing, careful reading with the cross-references is necessary to determine operative dates and definitions.

Full Text:

Section 73 Cost with reference to certain modes of acquisition.

Topics

Acts Income Tax