Just a moment...

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 characters0/2000
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.
RelevanceDefaultDate
    Act RulesIncome Tax
    Comparison of section 443 "Penalty in respect of certain income." between the Income-Tax Act, 2025 (...
    Act RulesIncome Tax
    Comparison of section 439 "Penalty for under-reporting and misreporting of income." between the Inco...
    Act RulesIncome Tax
    Comparison of section 438 "Set off and withholding of refunds in certain cases." between the Income-...
    Act RulesIncome Tax
    Comparison of section 437 "Interest on refunds." between the Income-Tax Act, 2025 (as passed) and th...
    Act RulesIncome Tax
    Comparison of section 428 "Fee for default in furnishing return of income." between the Income-Tax A...
    Act RulesIncome Tax
    Comparison of section 427 "Fee for default in furnishing statements." between the Income-Tax Act, 20...
    Act RulesIncome Tax
    Comparison of section 425 "Interest for deferment of advance tax." between the Income-Tax Act, 2025 ...
    Act RulesIncome Tax
    Comparison of section 424 "Interest for defaults in payment of advance tax." between the Income-Tax ...
    Act RulesIncome Tax
    Comparison of section 423 "Interest for defaults in furnishing return of income." between the Income...
    Act RulesIncome Tax
    Comparison of section 415 "Stay of proceedings in pursuance of certificate and amendment or cancella...
    Act RulesIncome Tax
    Comparison of section 411 "When tax payable and when assessee deemed in default." between the Income...
    Act RulesIncome Tax
    Comparison of section 406 "Payment of advance tax by assessee on his own accord." between the Income...
    Act RulesIncome Tax
    Comparison of section 402 "Interpretation." between the Income-Tax Act, 2025 (as passed) and the Inc...
    Act RulesIncome Tax
    Comparison of section 398 "Consequences of failure to deduct or pay or, collect or pay." between the...
    Act RulesIncome Tax
    Comparison of section 397 "Compliance and reporting." between the Income-Tax Act, 2025 (as passed) a...
    Act RulesIncome Tax
    Comparison of section 395 "Certificates." between the Income-Tax Act, 2025 (as passed) and the Incom...
    Act RulesIncome Tax
    Comparison of section 394 "Collection of tax at source." between the Income-Tax Act, 2025 (as passed...
    Act RulesIncome Tax
    Comparison of section 393 "Tax to be deducted at source." between the Income-Tax Act, 2025 (as passe...
    Act RulesIncome Tax
    Comparison of section 392 "Salary and accumulated balance due to an employee." between the Income-Ta...
    Act RulesIncome Tax
    Comparison of section 390 "Deduction or collection at source and advance payment." between the Incom...
❯❯
MaximizeMaximizeMaximize
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 SummariesHide All Summaries
    Act RulesIncome Tax
    Show AI Summary
    Penalty on undisclosed income: fixed levy on withholding-tax liability, with exemption for timely disclosure and payment.
    A discretionary penalty applies where assessed income includes categories of unexplained or undisclosed receipts imported by reference to existing provisions; it is levied as a percentage of the tax payable under the withholding-tax provision, is additional to that tax, is not imposed if the income was included in the return and the withholding tax paid within the relevant year, and cannot be duplicated by another penalty for the same income. The enacted text omits an explicit cross-application of existing procedural penalty machinery, creating procedural uncertainty.
    Act RulesIncome Tax
    Show AI Summary
    Penalty for under-reporting: statutory regime imposing enhanced sanctions for deliberate misreporting and rules for computing tax on additions.
    Clause 439 creates a penalty regime for under reporting and aggravated misreporting during tax proceedings by defining deemed under reporting events, prescribing formulae to compute under reported income (including interactions with deemed total income rules), allocating additions across years to prevent double counting, listing exceptions where penalties will not apply, enumerating aggravating misreporting acts that attract higher sanctions, and requiring that penalty be imposed by written order of the Competent Authority.
    Act RulesIncome Tax
    Show AI Summary
    Set-off of tax refunds: authorities may offset or temporarily withhold refunds subject to written intimation and procedural safeguards.
    Section 438 authorises the Assessing Officer and senior Commissioners to set off refunds due against outstanding tax liabilities and to withhold refunds where assessment or reassessment proceedings are pending. Set off must follow written intimation to the taxpayer. Withholding a refund while proceedings are pending is limited in time and requires reasons recorded in writing plus prior approval of the Principal Commissioner or Commissioner.
    Act RulesIncome Tax
    Show AI Summary
    Interest on refunds: entitlement to monthly simple interest and additional annual interest where orders trigger refunds.
    Interest on refunds is payable as simple interest at a monthly rate from specified starting dates determined by refund source (tax collected at source/advance tax/treatment as paid; tax paid under specified provisions; excess payments under demand notices), with an additional annual interest where refunds follow certain appellate or rectification orders. Periods attributable to the assessee/deductor are excluded; immaterial refunds below a threshold do not attract interest for defined categories; interest is adjusted if subsequent orders change the underlying amount and assessing officers may demand excess interest.
    Act RulesIncome Tax
    Show AI Summary
    Two-tier fee for late tax return filing: fixed higher fee for higher-income filers and capped fee for others.
    A statutory two tier fee applies where a person required to furnish a return within the prescribed time fails to do so. Both enacted and bill texts impose a fixed higher fee for taxpayers above the income threshold and a lower fee capped for taxpayers at or below that threshold. The enacted drafting places the capped lower fee first, preserving discretion up to the cap for lower income filers; both texts operate without prejudice to other provisions of the Act and cross reference the filing time provision. Procedural and enforcement details are not stated.
    Act RulesIncome Tax
    Show AI Summary
    Daily fee for delayed tax statements requires prepayment before filing and is capped at the tax collectible amount.
    A mandatory daily fee applies where a person fails to deliver a prescribed statement of tax deducted or collected at source within the time prescribed in a cross referenced subsection; the fee accrues each day until compliance, is capped so it does not exceed the amount of tax deductible or collectible for the period, and must be paid before delivering the delayed statement, without prejudice to other liabilities under the Act.
    Act RulesIncome Tax
    Show AI Summary
    Advance tax interest rules require instalment-specific payments; shortfalls attract staged interest and safe harbour thresholds for compliance relief.
    Section 425 imposes interest where advance tax instalments fall short of prescribed percentages by due dates, tying liability to tax due on the returned income. It prescribes staged instalment percentages and graduated interest on interim versus final shortfalls, provides two early safe harbour minima that eliminate interest if met, treats certain classes (profits declared under specified entries) with a distinct simple interest rule for the final instalment, and exempts shortfalls from interest for specified late arising incomes if taxed by later instalments or by 31 March.
    Act RulesIncome Tax
    Show AI Summary
    Interest for defaults in payment of advance tax triggers monthly simple interest where advance payments fall short of assessed tax.
    The provision charges simple interest where a taxpayer fails to pay advance tax or pays less than the safe harbour proportion of assessed tax, starting from 1 April following the tax year until determination of total income or completion of regular assessment. Interest is computed on assessed tax or the shortfall, with the assessed tax base reduced by specified items such as tax deducted/collected at source, reliefs and eligible tax credits; reassessment or recomputation increases or reduces interest accordingly and payments already made reduce liability.
    Act RulesIncome Tax
    Show AI Summary
    Interest for defaults in furnishing return may accrue from differing start dates, altering the interest period and liabilities.
    Section 423 charges simple interest for defaults in furnishing returns by applying a formula based on a tax base "A" and a period "T", with a Table linking specific filing or non-filing scenarios to starting and ending events for the interest period, reductions of the tax base by a prescribed definition of "tax paid", and provisions for adjustment (notice of demand or refund) where post-assessment orders change the tax on which interest is calculated.
    Act RulesIncome Tax
    Show AI Summary
    Stay of recovery: mandatory pause during granted payment time and while appeal-linked reductions remain pending.
    Section 415 requires the Tax Recovery Officer to grant time for payment and stay recovery during that period, and to stay recovery of any portion of a certificate corresponding to a reduced demand while related proceedings remain pending; where the order giving rise to the demand is modified and becomes final, the Officer must amend or cancel the certificate. The Act's enacted text links reductions specifically to modification of the order giving rise to the demand, narrowing the Bill's broader phrasing.
    Act RulesIncome Tax
    Show AI Summary
    Payment deadline for tax demands triggers monthly interest and potential acceleration on instalment default, while relief may be available.
    Clause 411 makes amounts in a notice of demand payable ordinarily within thirty days of service, permits the AO with Joint Commissioner approval to shorten that period, and charges simple monthly interest from the day after the due date until payment. The AO may extend time or allow instalments on timely application, but any instalment default accelerates the whole outstanding amount. Commissioners may reduce or waive interest for genuine hardship or circumstances beyond control, subject to cooperation and procedural safeguards. Where foreign law prevents remittance, the non remittable portion must not be treated as in default.
    Act RulesIncome Tax
    Show AI Summary
    Advance tax obligation: taxpayers must self estimate income and pay instalments, with permitted adjustments to remaining payments.
    Every person liable to pay advance tax must remit instalments based on the assessee's own estimate of current income (the specified sum) and the tax thereon, calculated by the prescribed method and paid at prescribed instalment percentages and due dates; taxpayers may increase or reduce amounts in remaining instalments to reflect revised estimates, and the clause itself defines specified sum but is silent on exceptions, enforcement, interest, penalties and procedural recordkeeping.
    Act RulesIncome Tax
    Show AI Summary
    Withholding definitions expanded to include both incorrect deduction and collection rates, increasing administrative scrutiny of statements.
    Section 402 provides the definitional framework for deduction and collection at source, specifying who is a person responsible for paying, buyer, seller and other categories, and defining transactional terms including rent, immovable property and digital-economy roles. The Act expands the concept of an "incorrect claim apparent from any information in the statement" to cover both incorrect rates of deduction and incorrect rates of collection, thereby enabling identification of filing errors from statements alone. Turnover thresholds and carve-outs determine when withholding obligations arise; several definitions rely on cross-references to external provisions.
    Act RulesIncome Tax
    Show AI Summary
    Deemed assessee in default for non-deduction or non-collection of tax exposes deductors/collectors to interest and asset charge.
    Failure to deduct, collect, or pay tax causes the person required to do so to be deemed an assessee in default, liable for interest on delayed deduction/collection and on delayed payment, and, where tax has been deducted or collected but not paid, the tax and interest form a statutory charge on all assets; a safe harbour exists if the recipient has filed a return, included the amount and paid tax and the deductor/collector produces the prescribed accountant's certificate, while penalty can be imposed only if the assessing officer is satisfied there were no good and sufficient reasons for the failure.
    Act RulesIncome Tax
    Show AI Summary
    TAN/PAN compliance tightens reporting and mandates higher withholding where PAN is not furnished, while shortening correction windows.
    Clause 397 mandates TAN application and mandatory TAN quoting by deductors/collectors, requires payees/payers to furnish a PAN (with enacted text adding a "valid" PAN requirement), prescribes higher withholding/collection rates where PAN is not furnished subject to enumerated exceptions, requires timely deposit of deducted/collected tax and filing of prescribed statements, provides a correction statement mechanism with a time limit, sets special reporting duties for payments to non residents and small interest payments by banks/co operatives/public companies, and preserves collector liability for unpaid but collectible tax.
    Act RulesIncome Tax
    Show AI Summary
    Certificates for lower tax withholding enable AO-issued rates or nil deduction and proportionate nonresident withholding relief.
    Clause creates an AO-issued certificate system permitting payees, buyers/licensees/lessees and payers to obtain prescribed-form certificates altering the rate (or, under the Act, rate or nil deduction) at which tax is deducted or collected; for non-salary payments to non-residents the payer may seek a proportionate determination of the taxable part; deductors/collectors must issue prescribed documentary certificates to deductees/collectees and the AO may cancel certificates after affording a reasonable opportunity, with detailed forms, validity and procedures left to rules.
    Act RulesIncome Tax
    Show AI Summary
    Collection of tax at source: TCS on specified receipts with exemptions, non cumulation and documentation duties.
    Clause 394 prescribes TCS on nine specified receipt types with collectors (sellers, authorised dealers, licensors/lessors) required to collect at prescribed rates at the earlier of debiting the buyer's account or receipt. Indian resident buyers may avoid collection by furnishing a prescribed declaration of end use; the enacted law imposes a delivery timeline for that declaration and adds an exemption for certain education loan funded remittances. The provision includes non cumulation rules to prevent duplicate collection and leaves procedural specifics to subordinate rules.
    Act RulesIncome Tax
    Show AI Summary
    Tax withholding obligations expanded to cover e-commerce and virtual asset transfers, with precedence rules to prevent multiple deductions.
    Section 393 prescribes a comprehensive TDS matrix covering payments to residents, non-residents and any person, listing payment categories, the person liable to deduct, rates or rates-in-force and monetary thresholds. Deduction is required at credit or payment, whichever is earlier, with specific precedence rules (notably for e-commerce) to prevent multiple deductions. The section contains carve-outs and nil-deduction declaration mechanisms subject to conditions and reporting; operational guidance emphasises mapping payments to entries, retaining declarations and ensuring tax on mixed cash and in-kind transactions before release.
    Act RulesIncome Tax
    Show AI Summary
    Deduction of tax at source on salaries: payer obligation to withhold at average rate and trustees to withhold on accumulations.
    Section 392 places primary TDS obligation on payers of salary to deduct tax at the time of payment at the average rate on estimated annual income; employers may opt to pay tax on non monetary perquisites. Trustees of recognised provident and superannuation funds must deduct tax where Schedule XI applies, with a specified 10% withholding rule for certain employees' provident fund accumulations. The enacted text tightens prescribed form and verification requirements, alters a cross reference to section 17, and expressly permits eligible start ups to "deduct or pay, as the case may be."
    Act RulesIncome Tax
    Show AI Summary
    Withholding tax and advance payments operate independently of assessment, securing provisional tax credits and rule making authority.
    Deduction or collection at source, advance payment, and specified payments under section 392(2)(a) operate independently of later assessment and are additional to other recovery measures; amounts remitted to the Central Government are treated as tax paid on behalf of the person from whose income tax was deducted, from whom tax was collected, or in respect of whose income tax was paid, and the Board may make rules for crediting such amounts and for attributing the tax year for credit.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Comparison of Section 208 "Tax on income from units purchased in foreign currency or capital gains arising from their transfer." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

      5 September, 2025

      Contents
      Acts
      Rules & Regulations
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Section 208 Tax on income from units purchased in foreign currency or capital gains arising from their transfer.

      Income-tax Act, 2025

      At a Glance

      The provided document is Clause 208 of the Income Tax Bill, 2025 - (Old Version), titled "Tax on income from units purchased in foreign currency or capital gains arising from their transfer." It prescribes special tax treatment for "overseas financial organisations" investing in specified Indian units. The provision affects offshore funds and, indirectly, specified mutual funds and public financial institutions. Effective date or enactment timing: Not stated in the document.

      Background & Scope

      Statutory hooks: Clause 208 is located in the Bill under the heading "Special provisions relating to non-residents and foreign company." It provides a targeted tax regime for an "overseas financial organisation" (Offshore Fund) that invests in India under arrangements with specified Indian entities and with SEBI approval. The clause covers income received in respect of units purchased in foreign currency, long-term capital gains on transfer of such units, and the balance of total income. Definitions provided in the clause include "overseas financial organisation," "public financial institution" (by reference to section 2(72) of the Companies Act, 2013), and "unit" (unit of a mutual fund specified in Schedule VII or the Unit Trust of India). Contextual policy objectives: Not stated in the document.

      Statutory Provision Mode

      Text & Scope

      The clause creates a composite tax structure for Offshore Funds. The tax payable is determined by a table with three categories:

      • Income received in respect of units purchased in foreign currency - Income-tax payable stated as "10%."
      • Long-term capital gains arising from transfer of such units - Income-tax payable stated as "12.5%."
      • "Total income as reduced by income referred to in against serial numbers 1 and 2" - tax treatment described as "Income-tax chargeable on such income."

      Paragraph (2) addresses deduction limitations: where the Offshore Fund's gross total income consists only of the unit income or long-term capital gains (or both), no deductions are allowed u/ss 26-61 or section 93(1)(a) and (e) or under Chapter VIII. If gross total income includes such income along with other income, the clause requires that the gross total income be reduced by the unit incomes for the purpose of allowing Chapter VIII deductions "as if" the reduced gross total income were the fund's gross total income.

      Interpretation

      The clause establishes a preferential/segregated tax treatment for certain categories of income of Offshore Funds rather than taxing the whole global income under general rates. The table reflects source-specific rates (10% and 12.5%) and contemplates residual income taxed under ordinary provisions. The language in paragraph (1) as drafted in the Bill treats the column C entries as amounts payable; given those are percentages, interpretation requires reading them as rates. The clause also attempts to ring-fence specified incomes for limited deduction access, suggesting a legislative intent to limit deduction claims against the preferred categories. Legislative intent beyond the text: Not stated in the document.

      Exceptions/Provisos

      Paragraph (2) provides the principal exception: where the fund's gross total income consists solely of the specified unit incomes, the clause disallows a broad swathe of deductions (sections 26-61, section 93(1)(a) & (e), and Chapter VIII). Where specified incomes form part of a mixed income stream, the specified incomes are to be segregated out for deduction computation purposes so that Chapter VIII deductions are allowed on the residual gross total income. Any other provisos or carve-outs: Not stated in the document.

      Illustrations

      • Example 1: An Offshore Fund has only income of 10 million INR from units purchased in foreign currency. Under the clause, that income would be subject to 10% tax; no deductions u/ss 26-61 or Chapter VIII would be allowable. The document does not state whether tax computation permits exemptions or credits; hence further computation specifics: Not stated in the document.
      • Example 2: An Offshore Fund has 10 million INR of unit income (subject to 10%) and 2 million INR of other income. The clause directs that the gross total income be reduced by the unit income for deduction purposes and that Chapter VIII deductions be allowed as if the reduced gross total income (2 million) were the gross total income. The document does not state how Chapter VIII deductions interact with other statutory reliefs or whether the 10% rate applies after or before such segregation for other taxes: Not stated in the document.

      Interplay

      The clause cross-references several statutory provisions: section 93(1)(a)/(e), Chapter VIII (deductions), sections 26-61, and the Companies Act definition for "public financial institution" (section 2(72)). It also references Schedule VII entries for identifying eligible mutual funds and requires SEBI approval for the arrangement. No implementing Rules, Notifications, or Circulars are cited in the Bill text provided. Where interaction with other tax provisions or double taxation treaties may arise: Not stated in the document.

      Differences Between Section 208 of the Income-tax Act, 2025 and Clause 208 of the Income Tax Bill, 2025 - (Old Version) and Practical Impact

      The two texts are substantially similar in structure and substantive content. Key textual differences and their practical impact are as follows:

      • Terminology for tax computation (Table column heading): The Act version (Section 208) states "Rate of income-tax payable" in column C, whereas the Bill (Clause 208 old version) uses "Income-tax payable" and, for item 3, "Income-tax chargeable on such income."
        • Practical impact: None substantive - both convey that fixed rates apply for specified incomes and the prevailing rates apply to the balance; the Act wording is marginally clearer in signalling rate-based computation.
      • References to section numbers for disallowance/deductions: Section 208 (Act) disallows deductions under "sections 28 to 58, 60 and 61 or section 93(1)(a) or (e) or under Chapter VIII"; Clause 208 (Bill) disallows deductions under "sections 26 to 61 or section 93(1)(a) and (e) or under Chapter VIII."
        • Practical impact: Potential substantive difference - the Bill's broader range (sections 26-61) would exclude more deductions if it were applied; the Act's narrower list (28-58, 60, 61) narrows the exclusion. If the Act text is authoritative, certain deductions falling in sections 26-27 or 59 would remain available; conversely, the Bill's earlier drafting would have disallowed those. The provided materials do not state legislative intent for this change.
      • Computation language for aggregate tax: Section 208(1) (Act) states the tax "shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B." The Bill phrasing said "shall be the aggregate of the amount specified in column C thereof."
        • Practical impact: The Act wording better describes rate application (rate x income); the Bill wording could be read as implying fixed amounts in column C. However, because column C contains percentage figures, the Act wording reduces ambiguity. The documents do not state any consequential computational rules beyond the table.

      Practical Implications

      • Compliance and risk areas grounded in the clause: Offshore Funds must establish that (i) the investment arrangement is with an eligible public sector bank, public financial institution or specified mutual fund; and (ii) the arrangement has SEBI approval. The clause conditions preferential tax treatment on these qualifying facts; documentation and SEBI approval evidence will be material. Any procedural details or documentary standards: Not stated in the document.
      • Record-keeping/evidence points suggested by the text: maintain records of the arrangement with Indian entities, SEBI approval, characterization of units as "purchased in foreign currency," computation segregating incomes and application of the specified rates. The clause does not prescribe exact records or timeframes for retention: Not stated in the document.

      Key Takeaways

      • Clause 208 creates a separate tax regime for Offshore Funds investing in specified Indian units with SEBI-approved arrangements.
      • Specified incomes are taxed at 10% (income from units purchased in foreign currency) and 12.5% (long-term capital gains on transfer of such units); other income is taxed under ordinary provisions.
      • Deductions are broadly restricted where an Offshore Fund's gross total income consists solely of the specified incomes (disallowance stated for sections 26-61, section 93(1)(a) & (e), and Chapter VIII).
      • Where specified incomes coexist with other income, the clause requires segregation so Chapter VIII deductions apply to the residual income "as if" that residual were the gross total income.
      • Definitions and eligibility pivot on arrangements with specified Indian entities and SEBI approval; precise procedural and evidentiary requirements are not set out in the Bill text.
      • Certain drafting differences between the Bill and the later Act text (e.g., the range of sections listed for disallowance and the phrasing of tax computation) may affect deduction availability and interpretive clarity.

      Full Text:

      Section 208 Tax on income from units purchased in foreign currency or capital gains arising from their transfer.

      Topics

      ActsIncome Tax