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    TDS on purchase of goods: buyer withholding required, with precedence rules to avoid overlap with other withholding provisions.
    Clause 393(1)[Table: S.No. 8(ii)] imposes a TDS obligation on the buyer to deduct tax on purchases of goods from resident sellers once aggregate purchases from a seller in a financial year exceed the specified threshold, with deduction due at credit or payment, and a broad exclusionary clause preventing application where tax is deductible or collectible under any other provision of the Act.
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    TDS on specified senior citizens centralises tax deduction at banks, relieving return filing when tax is correctly deducted at source.
    Specified banks are required to compute a specified senior citizen's total income after allowing Chapter VIII deductions and rebate, deduct tax at rates in force with a nil threshold, and remit TDS; an express precedence clause ensures this provision overrides other TDS provisions. The mechanism centralises compliance with banks obtaining declarations, maintaining evidence and records, thereby relieving eligible senior citizens from return filing provided the bank correctly applies deductions and remits tax.
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    TDS on e-commerce: operators must withhold on gross platform-facilitated sales, with a small-seller exemption on conditions.
    E-commerce operators must withhold TDS on the gross amount of sales or services facilitated through their platforms, with withholding due at the earlier of credit or payment and including direct buyer payments as deemed payments by the operator. Deductions apply on a gross basis without netting fees, exclude operator receipts for unrelated services such as advertising, and take precedence over other TDS provisions. Individual and HUF participants with annual turnover below the legislated threshold who furnish PAN or Aadhaar are exempt from withholding.
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    TDS on large cash withdrawals: deduction at payment with exemptions for banks and regulated intermediaries, non filer rule absent here.
    Clause 393(3) requires banks, co operative societies engaged in banking and post offices to deduct two per cent TDS at the time of cash payment where aggregate withdrawals from one or more accounts of a recipient exceed prescribed thresholds, with a higher threshold for co operative societies; Clause 393(4) exempts payments to the Government, banks, post offices, regulated business correspondents and authorised white label ATM operators. The Bill mirrors the existing framework but, in the extracted text, omits an explicit non filer regime and express central government notification powers, creating potential operational and interpretive uncertainty.
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    TDS on high-value payments by individuals/HUFs expands withholding obligations for contractual, professional and commission disbursements.
    Clause 393(1)[Table: S.No. 6(ii)] requires TDS by individuals or HUFs (not otherwise liable under specified TDS entries) on payments to a resident for carrying out work (including supply of labour), fees for professional services, or commission/brokerage (excluding insurance commission) where aggregate payments to the payee in a tax year exceed a prescribed threshold; deduction is at the time of credit or payment and the clause is integrated into a tabular TDS framework necessitating aggregation, with definitions and certain procedural relaxations left to rules or guidance.
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    TDS on interest for foreign borrowings consolidated under new clause, keeping concessional framework but raising definitional and transition issues.
    Clause 393(2) consolidates concessional TDS treatment for interest to non residents on foreign currency borrowings, rupee denominated bonds and IFSC listed bonds, aligning mechanics and cut off windows with Section 194LC while differing in presentation and reliance on external definitions; Central Government approval remains a condition for specified instruments and drafting gaps on limits, definitions and transitional treatment may require subordinate rules to avoid interpretive disputes.
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    TDS on securitisation trust distributions: uniform 10% for residents, treaty rates for non-residents, no threshold.
    Clause 393 mandates TDS on distributions by a securitisation trust: Clause 393(1) imposes 10% TDS on any income paid to resident investors with no threshold, deducted at the earlier of credit or payment by the trust; Clause 393(2) requires withholding on non-resident investors at rates in force, permitting treaty relief. Both provisions treat credits (including to suspense accounts) as TDS events and require trusts to maintain documentation of payee status and treaty claims.
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    TDS on investment fund distributions: withholding applies, with treaty relief and exemptions for non taxable income.
    TDS on distributions by investment funds requires withholding at applicable resident and non resident rates at the earlier of credit or payment, excluding any portion of income that is statutorily exempt. Funds must determine and segregate taxable versus exempt portions of mixed income, apply treaty or domestic rates for non residents upon proper documentation, and maintain records to support exemptions or reduced rates, while coordinating these obligations with other TDS provisions to avoid double deduction.
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    TDS on business trust distributions: differentiated resident/non resident rates and SPV contingent exemptions under the Income Tax Bill, 2025.
    Clause 393 of the Income Tax Bill, 2025 mandates 10% TDS on distributed income to resident unitholders, differentiated rates for non-resident unitholders (including lower rates for certain interest-type distributions and "rates in force" for others), and exempts specified distributions from TDS where the underlying SPV has not opted for the concessional tax regime, thereby tying withholding obligations to the SPV's tax-regime choice.
    Act RulesBills
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    TDS on infrastructure debt fund interest: concessional withholding retained for non-resident investors, deducted at credit or payment.
    Clause 393(2)[Table: S.No. 5] retains a concessional TDS regime for any income by way of interest paid by an infrastructure debt fund listed in Schedule VII to a non resident (including foreign companies), requiring deduction at source at the specified concessional rate at the earlier of credit or payment, with no monetary threshold, and integrated within the Bill's harmonised TDS framework that addresses procedural rules, exceptions, grossing up, and interaction with double taxation treaties.
    Act RulesBills
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    TDS on land acquisition compensation maintained; threshold and RFCTLARR Act exemptions preserved, procedural consolidation introduced.
    Clause 393 of the Income Tax Bill, 2025 mandates TDS at 10% on any sum in the nature of compensation or enhanced compensation, or consideration or enhanced consideration, for compulsory acquisition of immovable property (other than agricultural land), when amounts paid or credited to a resident exceed Rs. 5,00,000 in a financial year; Clause 393(4) exempts awards or agreements exempt from income-tax under the RFCTLARR Act, and deduction is required at the earlier of payment or credit.
    Act RulesBills
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    TDS on mutual fund distributions: withholding required at source with exclusion for capital gains, subject to threshold rules.
    Clause 393 consolidates TDS on income from units of specified mutual funds and analogous instruments, requiring deduction by any payer at the prescribed rate at the time of credit or payment, subject to an aggregate threshold, while expressly excluding receipts that are of the nature of capital gains; the provision retains deeming rules for suspense accounts and links to cross referenced exemptions and schedules for definitions, thereby centralising administrative obligations and necessitating payer systems to characterise payments and aggregate receipts for threshold application.
    Act RulesBills
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    TDS on professional and technical services clarified: consolidated rates, threshold and personal-payment exemption streamline withholding obligations.
    Clause 393(1) requires TDS by a specified person on resident payments for professional services, technical services, director's fees (non-salary), royalty and related sums, with distinct lower rates for certain technical, cinematographic and call-centre payments and a higher rate for other cases, deductible at the earlier of payment or credit and applicable only above the prescribed threshold. Clause 393(4) exempts individuals and HUFs from TDS where payments are made exclusively for personal purposes.
    Act RulesBills
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    TDS on monetary consideration under development agreements - deduction at credit or payment with no threshold.
    Clause 393(1)[Table: S.No. 3(ii)] requires TDS on any monetary consideration under agreements referred to in section 67(14), applying to any payer, excluding in-kind consideration, with deduction at the earlier of credit or payment, no monetary threshold, and an explicit rule that where both general immovable property TDS and S.No. 3(ii) apply, deduction is to be made only under S.No. 3(ii).
    Act RulesBills
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    TDS on rent expanded to include equipment and furnished premises, increasing withholding scope and compliance for individuals and HUFs.
    Clause 393(3)[Table: S.No. 2(ii)] expands TDS on rent by subjecting payments for use of land, buildings, furniture, fittings, machinery, plant and equipment to withholding by specified persons where monthly payments exceed the threshold; it prescribes asset based rates and requires deduction at the earlier of credit or payment for the last month of the tax year or tenancy, while providing a declaration mechanism for nil deduction and procedural reliefs for small non business payers.
    Act RulesBills
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    TDS on immovable property transfers requires deduction on the higher of consideration or stamp duty value at payment or credit.
    Clause 393(1)[Table: S.No. 3(i)] requires TDS on transfers of immovable property (excluding agricultural land) where either the consideration or the stamp duty value exceeds the threshold. The transferee is the payer required to deduct tax at a fixed percentage of the higher of consideration or stamp duty value, with deduction at the time of credit or payment. Aggregation of amounts across multiple transferees and transferors applies, and the table provides tie breaker rules and specific exclusions such as compulsory acquisition.
    Act RulesBills
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    TDS on rent: payer-based uniform and differentiated withholding alters withholding obligations and REIT exemption treatment.
    Clause 393 requires TDS on rent to residents where monthly rent exceeds the threshold, with deduction at the earlier of credit or payment. Non-specified payers withhold at a uniform low rate for all asset types, while specified persons withhold at differentiated rates for machinery/plant/equipment versus land/building/furniture/fittings. The Bill maintains an exemption from TDS for payments to REITs in respect of directly owned real estate assets and preserves rules treating suspense-account credits as payment for withholding purposes.
    Act RulesBills
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    TDS on commission and brokerage: Bill preserves current threshold and rate and maintains targeted exemptions for telecom franchisees.
    Clause 393(1) mandates that a specified person deduct TDS at two percent on resident commission or brokerage payments (excluding insurance commission) when aggregate payments exceed the statutory threshold, with deduction at the earlier of credit or payment and anti avoidance deeming for suspense accounts. Clause 393(4) preserves a targeted exemption for certain telecom franchisee payments, maintaining continuity with existing sectoral relief and reducing compliance burdens.
    Act RulesBills
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    TDS on lottery-related payments: unified withholding on commissions and prizes with harmonized threshold and deduction rate.
    Clause 393(3)[Table: S.No. 4] consolidates TDS on payments to persons engaged in stocking, distributing, purchasing or selling lottery tickets, requiring any person making payments of commission, remuneration or prize to deduct tax at the earlier of credit or payment; it includes a deeming fiction treating credits to suspense or intermediary accounts as credit to the payee and imposes standard deductor duties of deposit, certification and return-filing, while leaving aggregation rules and characterization of complex incentive structures unclear.
    Act RulesBills
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    TDS on national savings withdrawals: mandatory deduction at source with defined threshold and exemptions for individuals and heirs.
    Clause 393(3)[Table: S.No. 6] requires any person responsible for paying amounts referred to in section 80CCA(2)(a) to deduct income-tax at the rate of 10% at the time of payment where the amount or aggregate amount paid during the tax year exceeds Rs. 2,500; the Table under sub-section (4), Sl. No. 19, exempts payments made to an assessee who is an individual and to the heirs of an assessee, and payers must deposit TDS, file returns, and issue certificates in accordance with the procedural framework.

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      Comparison of Section 201 "Tax on income of new manufacturing domestic companies." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

      4 September, 2025

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      Section 201 Tax on income of new manufacturing domestic companies.

      Income-tax Act, 2025

      At a Glance

      Document considered: Clause 201 of the Income Tax Bill, 2025 (Old Version) titled "Tax on income of new manufacturing domestic companies." It provides an elective concessional tax regime for certain newly set-up domestic manufacturing companies and specifies conditions, computation rules and exclusions. Affected parties: domestic companies engaged in manufacture/production and the tax administration. Effective/decision date: Not stated in the document.

      Background & Scope

      The clause is framed as part of an Income Tax Bill, 2025. Statutory hooks referenced within the clause include Parts A, B and this Part of the Chapter (with an express exception for sections 199 and 200), and multiple provisions across the Income-tax enactment (sections 45(2)(c), 47(1)(b), Chapter VIII except sections 146 and 148, section 205(1)(a) to (g), section 116(1), section 205(4), section 205(2), and section 263(1) for due dates). The provision is limited to "a domestic company engaged in business of manufacture or production of any article or thing," and creates an option for such a company to compute income-tax at specified concessional rates subject to enumerated conditions and computation rules set out in sub-sections (2)-(5).

      Statutory Provision Mode

      Text & Scope

      Clause 201 creates an elective special tax computation regime for a domestic company engaged in manufacturing or production of any article or thing. The regime operates "irrespective of anything contained in this Act," but is subject to the provisions of Parts A, B and this Part (other than sections 199 and 200). The Table prescribes four tax treatments: (a) 15% on total income except incomes in clauses (b), (c), (d); (b) 22% (without any deduction or allowance) on income that is neither derived from nor incidental to manufacturing/production and for which no specific rate has been provided separately under this Part; (c) 22% on short-term capital gains from transfer of capital asset on which no depreciation is allowable; (d) 30% on income deemed u/s 205(4). Eligibility is conditional on specified criteria in column D: exercise of the option as per sub-section (2); set-up/registration on or after 1 October 2019; commencement of manufacturing/production on or before 31 March 2024; total income computation as per sub-section (3); and fulfilment of sub-section (5) and section 205(2).

      Interpretation

      The clause expresses a legislative intent to provide an elective concessional tax regime for newly established manufacturing companies, but subject to precise temporal and procedural conditions. The "irrespective of anything contained in this Act" opening indicates a stand-alone/comprehensive computation model, constrained only by specified Parts and sections. The requirement that certain incomes be taxed at fixed percentage rates, and the prohibition in clause (b) on any deduction or allowance for the 22% category, indicate an intent to simplify/compress the tax base for qualifying incomes. The option mechanism and the non-withdrawable nature (sub-section (2)(c)) suggest a durable election once validly made.

      Exceptions/Provisos

      Key carve-outs and conditions include:

      • Temporal eligibility: set-up and registration on or after 1 October 2019; commencement of manufacturing/production on or before 31 March 2024.
      • Computation constraints under sub-section (3): exclusions from deductions (specified sections) and prohibition on set-off of certain losses/unabsorbed depreciation per section 116(1) where attributable to excluded deductions.
      • Option mechanics: must be exercised on or before the due date specified u/s 263(1) for furnishing the first return for any tax year; once exercised, it applies to subsequent years and cannot be later withdrawn.
      • Invalidation: failure to fulfil eligibility conditions in any tax year causes invalidation of the option for that year and subsequent years, with application of other Act provisions as if the option had not been exercised.
      • Amalgamation rule: option survives only for the amalgamated company if the conditions in sub-section (1) continue to be satisfied by that company.

      Illustrations

      • Example 1: A domestic company established on 15 November 2019 that commenced commercial manufacturing on 10 March 2024 and validly exercises the option by the specified due date will compute its manufacturing income at 15% and, if it has non-manufacturing income not covered by specific rates under this Part, such income will be taxed at 22% without deductions, pursuant to the Table. (Facts not beyond the text.)
      • Example 2: If a qualifying company derives short-term capital gains on a capital asset on which no depreciation is allowable under the Act, such gains will be taxed at 22% as per clause (c). (Directly from the text.)

      Interplay

      The clause expressly interacts with multiple other sections and Parts: it disapplies general provisions except as noted and requires computation "as per the provisions of sub-section (3)" which cross-references sections 45(2)(c), 47(1)(b), Chapters and specified parts of section 205, and section 116(1). It also refers to section 205(4) for deemed income at the 30% rate and to section 205(2) in eligibility. The option exercise due date is linked to section 263(1). The Bill itself does not include other notifications, rules or circulars; if any such instruments exist, they are Not stated in the document.

      Differences between the two provided provisions and Practical Impact

      Comparison of the two documents (Section 201 - final statute as shown at Document 1, and Clause 201 - Bill old version at Document 2) reveals the following textual differences and their practical impact strictly as can be derived from the text:

      • Reference to Parts of the Chapter: The Bill (Document 2) refers to "Parts A, B and this Part" while the later version (Document 1) refers to "Parts A, B, E and this Part."
        • Practical impact: The inclusion of Part E in the later text expands the corpus of provisions under which specific rates of tax may be provided or under which interactions must be considered; consequently, the scope of provisions with which the concessional regime must be read may be broader in the later text. From the Bill text alone: the regime, as drafted there, excludes interaction with Part E; Document 1 includes Part E-thereby potentially changing the applicability of certain rates and interactions. (All conclusions are based on the textual difference; no external facts are stated.)
      • Clause (b) scope language: In the Bill (Document 2) clause (b)(ii) limits the 22% treatment to income "in respect of which no specific rate of tax has been provided separately under this Part." The later version (Document 1) instead references "under Parts A, B, E and this Part."
        • Practical impact: The Bill's narrower reference confines the carve-out to this Part only; the later version's wider reference brings within its ambit any specific rates provided in Parts A, B or E. This alters which incomes qualify for the 22% treatment under clause (b) depending on whether specific rates are in Parts A/B/E.
      • Specific cross-references and subsection numbering: The Bill lists "sections 45(2)(c) and 47(1)(b)" while the later text lists "section 45(2) or 47(1)(b)." The Bill cites "Chapter VIII other than sections 146 and 148" (plural) while the later text says "Chapter VIII other than section 146 or 148" (singular/or). The Bill refers to "section 205(1)(a) to (g)" (as a range) whereas the later text uses "sections specified in 205(1)(a) to (g)." The Bill cites "section 116(1)" whereas the later text cites "section 116."
        • Practical impact: These are drafting/precision differences. Where a specific sub-clause is cited in the Bill (e.g., 45(2)(c)), that confines the exclusion to that sub-clause rather than the whole of 45(2). Likewise, citing 116(1) narrows reference to that sub-subsection rather than section 116 as a whole. The practical consequence is interpretive: the Bill's more specific references potentially narrow the exclusions from deduction/set-off; the later text's broader references widen them. Absent other material, the Bill's text would limit the non-allowance of specific deductions to the narrowly enumerated paragraphs, whereas the later text indicates a broader non-allowance.
      • Minor drafting/format differences: Variations in plurality and punctuation (e.g., "such option, once exercised, shall apply to subsequent tax years;" appears same in both) do not change substance.
        • Practical impact: Minimal, limited to clarity and potential interpretive emphasis.

      Practical Implications

      • Compliance and risk areas: Companies must track the temporal eligibility windows (set-up/registration and commencement dates), adhere to the option exercise deadline linked to section 263(1), and monitor continued fulfilment of conditions annually because a breach invalidates the option prospectively. The prohibition on certain deductions and set-offs requires careful computation and documentation to demonstrate attribution of losses/depreciation to excluded deductions.
      • Record-keeping/evidence: The text implies the necessity of contemporaneous evidence of incorporation/registration date, date of commencement of manufacturing/production, records establishing the nature of income (manufacturing versus non-manufacturing), allocation studies to show whether losses or depreciation are attributable to excluded deductions, and records evidencing exercise of the option within the prescribed manner and deadline. Specific forms/procedures for exercise are Not stated in the document.

      Key Takeaways

      • Clause 201 offers an elective concessional tax computation for newly set-up domestic manufacturing companies with fixed percentage tax rates for categories of income.
      • The option is time-sensitive, irrevocable once exercised, and may be invalidated upon failure to meet conditions in any year.
      • Certain deductions and set-offs are excluded when computing total income for purposes of the regime; precise cross-referenced sections limit allowable deductions.
      • Eligibility is contingent on incorporation/registration and commencement dates; these temporal thresholds are integral to qualification.
      • On amalgamation, the option survives only if the amalgamated company continues to satisfy the enumerated conditions.
      • Interplay with other Parts and sections is extensive; precise statutory cross-references create interpretive points that may require careful statutory construction.
      • Procedures, prescribed manner of exercising the option, and exact forms or rules for implementation are Not stated in the document.

      Full Text:

      Section 201 Tax on income of new manufacturing domestic companies.

      Topics

      ActsIncome Tax