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

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
    Penalty Provisions for Non-compliant Loan Repayments in India's Income Tax Law : Clause 453 of the I...
    Act Rules Bills
    Mandatory Electronic Payments and Penalty Regimes : Clause 452 of the Income Tax Bill, 2025 Vs. Sect...
    Act Rules Bills
    Evolving Penalty Regimes for Monetary Transaction Violations : Clause 451 of the Income Tax Bill, 20...
    Act Rules Bills
    Cash Transaction Penalties under Indian Tax Law : Clause 450 of the Income Tax Bill, 2025 Vs. Sectio...
    Act Rules Bills
    Evolution of Penalty Provisions for Failure to Collect Tax at Source : Clause 449 of the Income Tax ...
    Act Rules Bills
    Practical and Legal Implications of Penalty for TDS Defaults in Complince under Indian Income Tax La...
    Act Rules Bills
    Practical Dimensions of Penalty for Non-Submission of Accountant's Report in Indian Taxation : Claus...
    Act Rules Bills
    Audit Compliance and Penalty Provisions under Indian Income Tax Law : Clause 446 of the Income Tax B...
    Act Rules Bills
    Penalties for defeating the policy objective of fostering genuine charitable activities by Related P...
    Act Rules Bills
    Penalizing False Accounting Entries : Clause 444 of the Income Tax Bill, 2025 Vs. Section 271AAD of ...
    Act Rules Bills
    Legal and Practical Dimensions of Penalties for Undisclosed Income in Indian Taxation : Clause 443 o...
    Act Rules Bills
    Legal Framework for Documentation Penalties under Indian Tax Law : Clause 442 of the Income Tax Bill...
    Act Rules Bills
    Penalty Provisions for Non-maintenance of Books under Indian Income Tax Law : Clause 441 of the Inco...
    Act Rules Bills
    Immunity from Penalty and Prosecution in Income Tax Law : Clause 440 of the Income Tax Bill, 2025 Vs...
    Act Rules Bills
    Penalty Provisions for Under-Reporting and Misreporting of Income under Income-tax Law : Clause 439 ...
    Act Rules Bills
    Section 269T of the Income-tax Act, 1961 : Clause 189 of Income Tax Bill, 2025 Vs. Explanation to Se...
    Act Rules Bills
    Evolution of Cash Transaction Controls in Indian Tax Law : Clause 188 of the Income Tax Bill, 2025 V...
    Act Rules Bills
    Change in India's Digital Payment Mandate : Clause 187 of the Income Tax Bill, 2025 Vs. Section 269S...
    Act Rules Bills
    Restricting High-Value Cash Transactions in India : Clause 186 of the Income Tax Bill, 2025 Vs. Sect...
    Act Rules Bills
    Restricting Cash Transaction Regime : Clause 185 of Income Tax Bill, 2025 Vs. Section 269SS of Incom...
❯❯
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
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.
Act Rules Bills
Show AI Summary
Electronic payment mandate triggers daily penalties for non compliance unless a taxpayer proves good and sufficient reason.
Clause 452 empowers the Assessing Officer to impose a fixed per day monetary penalty for failure to provide prescribed electronic modes of payment under section 187, subject to a saving where the person proves good and sufficient reason for the failure; the provision mirrors the former section 271DB framework but streamlines authority and lacks detailed procedural guidance.
Act Rules Bills
Show AI Summary
Monetary transaction penalty: discretion to impose a penalty equal to prohibited receipt unless good and sufficient reasons are proved.
Clause 451 empowers the Assessing Officer to impose a penalty equal to the sum received in contravention of section 186 unless the recipient proves good and sufficient reasons; the provision emphasises proportionality, vests discretion in enforcement, omits explicit procedural safeguards and mens rea, and mirrors the substantive penalty quantum and defence in the earlier statutory regime while differing in statutory tone and procedural concision.
Act Rules Bills
Show AI Summary
Cash transaction penalty: acceptance of prohibited loans or deposits triggers penalty equal to amount received under the new clause.
Clause 450 imposes a penalty equal to the amount of any loan, deposit or specified sum taken or accepted in contravention of the substantive prohibition, centralizes authority to impose that penalty with the Assessing Officer, and leaves key interpretive and procedural questions-such as the definition of "specified sum", the availability of a reasonable cause exception, and limitation and hearing procedures-to be clarified elsewhere in the Bill or by administrative guidance.
Act Rules Bills
Show AI Summary
Penalty for failure to collect tax at source: Assessing Officer may impose penalty equal to uncollected tax, discretion noted.
Clause 449 provides that any person required under Chapter XIX-B who fails to collect the whole or part of tax may be liable to a penalty equal to the amount of tax not collected, with the Assessing Officer empowered to impose that penalty; the clause covers total and partial failures, fixes the penalty quantum as equal to the uncollected tax, and does not expressly provide a reasonable cause exception.
Act Rules Bills
Show AI Summary
Penalty for failure to deduct tax at source: equal to unpaid tax, imposed at Assessing Officer's discretion.
Clause 448 penalises failure to deduct, pay, or ensure payment of tax at source under Chapter XIX-B and specified notes, imposing a penalty equal to the tax unpaid and vesting discretion to impose that penalty in the Assessing Officer; the clause covers partial failures and obligations to ensure payment but is silent on an explicit reasonable cause defence.
Act Rules Bills
Show AI Summary
Failure to furnish accountant's report under section 172 may attract fixed statutory penalty; procedural safeguards need clarification.
Clause 447 authorises the Assessing Officer to impose a fixed penalty of one lakh rupees for failure to furnish an accountant's report as required by section 172; the provision mirrors Section 271BA in structure and intent, emphasising a uniform fixed penalty to enforce documentary compliance, while raising issues about the scope of section 172, the absence of an explicit reasonable cause exception, and procedural safeguards such as show cause notice and opportunity to be heard.
Act Rules Bills
Show AI Summary
Audit compliance penalty: failure to obtain or file mandated audit reports may attract a capped percentage-based sanction.
Clause 446 penalizes failure to obtain a mandatory audit or to furnish the audit report under s.63 by authorizing the Assessing Officer to impose a penalty equal to the lesser of a percentage of total sales, turnover or gross receipts for the relevant tax year(s) or a fixed monetary cap, thereby targeting both non-audit and non-filing conduct and centralizing enforcement discretion under a proportional, capped sanction.
Act Rules Bills
Show AI Summary
Penalty for diversion of charitable funds: escalating sanctions for benefits to related persons under the new income tax framework.
Clause 445 links penalties to the charging of "specified income" under section 337 where a registered non-profit applies income for the benefit of a related person. It covers direct and indirect benefits, vests discretion in the Assessing Officer to impose a monetary penalty during proceedings, prescribes an equal-amount penalty for the first violation and a doubled penalty for subsequent violations, and does not require proof of mens rea.
Act Rules Bills
Show AI Summary
Penalty for false accounting entries: false or omitted entries made to evade tax attract a penalty equal to the entry amount.
Penalty for false or omitted accounting entries applies where entries are material to computation of total income and made with intent to evade tax; penalty equals the aggregate amount of the false or omitted entry, extends to anyone who causes such entries, and covers use or intention to use forged documents, invoices without actual supply/receipt, and invoices involving non existent persons, with Assessing Officer and specified appellate officers empowered to impose the sanction.
Act Rules Bills
Show AI Summary
Penalty for undisclosed income: fixed tax-based sanction added to assessed tax for unexplained income, with limited exceptions.
Clause 443 authorises tax officers and appellate commissioners to impose a fixed additional penalty on tax computed in respect of income determined from specified unexplained sources, while exempting amounts voluntarily disclosed and taxed within the relevant year, and barring a duplicate penalty under an alternate penalty provision; procedural safeguards in designated procedural sections apply to the imposition and appeal of the penalty.
Act Rules Bills
Show AI Summary
Documentation penalties: new clause preserves ad valorem and flat penalties, reinforcing strict transfer pricing compliance for cross border transactions.
Clause 442 establishes penalties for failures to maintain, report, or furnish accurate documentation for international transactions and specified domestic transactions, comprising an ad valorem penalty imposed by the Assessing Officer or Commissioner (Appeals) for non maintenance, non reporting or incorrect information, and a prescribed authority's power to levy a flat monetary penalty for failure to furnish required information; the provision largely mirrors Section 271AA but omits an explicit "without prejudice" clause and does not address reasonable cause or proportionality concerns.
Act Rules Bills
Show AI Summary
Record keeping obligation triggers fixed penalty for non maintenance or non retention of prescribed tax records, raising proportionality concerns.
Clause 441 imposes a fixed penalty for failure to keep, maintain, or retain prescribed books of account and documents as required by the statutory reference provision, and vests authority to impose the penalty in the Assessing Officer and appellate officers. The clause applies an objective standard of liability, omits an explicit savings clause preserving other penalty provisions, and contains no express exception for reasonable cause, raising issues of cumulative penalties and proportionality.
Act Rules Bills
Show AI Summary
Immunity from penalty: mechanism to obtain protection from penalty and prosecution when tax is paid and no appeal is filed.
Clause 440 permits an assessee to apply for immunity from penalty and prosecution where tax and interest under the assessment/reassessment order are paid within the notice period and no appeal is filed; the application must be made within one month in prescribed form, the AO must decide within three months after giving opportunity of being heard, immunity is granted only after the appeal period expires and excludes cases of aggravated defaults, and an order on immunity is final and bars appeal or revision if accepted.
Act Rules Bills
Show AI Summary
Penalty for under-reporting: preserves formula-based computation and differential rates for misreporting, and procedural safeguards.
Clause 439 establishes a formula-based penalty framework empowering a defined Competent Authority to impose penalties for seven specified scenarios of under-reporting, prescribes quantified computation methods for first assessments, reassessments and deemed income, preserves exceptions for bona fide explanations and documented transfer pricing adjustments, requires written orders and bars double penalisation, and differentiates penalties by imposing a higher sanction for misreporting defined by a specified list of misrepresentation and suppression acts.
Act Rules Bills
Show AI Summary
Mode of payment restrictions for property linked receipts expanded to include any monetary receipt related to proposed transfers.
Clause 189 of the Income Tax Bill, 2025 defines "banking company", certain rural finance institutions, "specified sum", and "specified advance" to frame non cash payment rules for receipts and repayments linked to immovable property. It mirrors the Explanation to Section 269T in several respects-notably the definition of "specified advance"-but adds an explicit "specified sum" to capture any monetary receipt related to a proposed property transfer whether or not the transfer occurs, thereby potentially broadening regulatory coverage and creating interpretative issues where payments overlap the two terms.
Act Rules Bills
Show AI Summary
Mode of repayment restrictions: non cash repayment mandated for covered loans and advances to ensure traceability and compliance.
Clause 188 mandates non cash repayment of loans, deposits and specified advances by account payee cheque, bank draft, electronic clearing or other prescribed electronic modes when the amount or the aggregate held by the person equals or exceeds twenty thousand rupees, with a higher threshold of two lakh rupees for primary agricultural credit societies and related rural banks. It exempts repayments to Government and regulated banking or notified entities, allows intra branch crediting by banks, broadly defines "loan or deposit," covers advances related to immovable property, and emphasizes aggregation to prevent splitting transactions.
Act Rules Bills
Show AI Summary
Digital payment mandate requires businesses to provide prescribed electronic modes, promoting traceability and reducing cash transactions.
Clause 187 mandates that every person carrying on business whose sales, turnover, or gross receipts exceed the prescribed monetary threshold in the immediately preceding tax year shall provide facilities for accepting payment through prescribed electronic modes, in addition to any other electronic modes offered; rule-making will specify the required modes, and compliance carries operational, record-keeping and penal implications while raising interpretive issues around prescription, group aggregation, and regulatory harmonization.
Act Rules Bills
Show AI Summary
Restriction on high value cash transactions: mandatory use of prescribed banking or electronic modes to enhance traceability and compliance.
Clause 186 prohibits receipt of cash at or above the specified monetary threshold except through account payee cheque, bank draft, electronic clearing, or other prescribed electronic modes, applying the ban to aggregated daily receipts from the same person, single transactions, and transactions linked to a single event or occasion; exemptions include government and specified banking entities and further classes as notified by the Central Government, while interpretive ambiguities and delegated rulemaking on permissible modes may require administrative clarification.
Act Rules Bills
Show AI Summary
Cash transaction restriction: acceptance of loans, deposits and advances must be made only through traceable banking or electronic modes.
Clause 185 prohibits accepting loans, deposits or specified sums in cash when the current transaction, the unpaid balance of prior transactions with the same person, or their aggregate reaches the prescribed threshold, and permits receipt only by account-payee cheque, account-payee bank draft, electronic clearing through a bank account or other prescribed electronic modes; exceptions cover the Government, specified banking and statutory entities, notified bodies, a rural higher threshold for primary agricultural credit societies and a narrow agricultural income exception.

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