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    Application clause ensures general tax provisions apply to MAT/AMT assessees unless expressly overridden by section rules.
    Clause 206(12) provides that, save as otherwise provided in this section, all other provisions of the Income Tax Act apply to assessees covered by Clause 206, so that specific MAT/AMT rules within the clause override general provisions only to the extent of inconsistency and otherwise preserve the operation of assessment, appeal, penalty, interest, set-off, carry forward and credit mechanisms under the Act.
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    MAT/AMT credit mechanism clarified - excess alternate-tax paid is a carry-forward entitlement usable against future regular tax liability.
    MAT/AMT credit is the difference between tax paid under Clause 206(1) and tax payable under normal provisions, carried forward as a non-refundable, non-interest-bearing entitlement to be set off in future years when regular tax exceeds MAT/AMT; credits are adjusted for excess foreign tax credits and for any changes in tax liability resulting from assessment or appellate orders, and lapse after the prescribed carry-forward period.
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    Minimum tax harmonization: unified book profit computation and aligned accounting rules for MAT and AMT compliance.
    Clause 206(2)-(5) defines book profit by B = P + (I - R), lists items to be added and reduced in computing book profit, mandates preparation of profit and loss statements as per applicable enactments or Schedule III, consolidates special adjustments for varied assessees (including Ind AS transition treatments), requires consistency in accounting policies and depreciation for MAT/AMT purposes, and preserves recomputation and relief mechanisms akin to existing procedures.
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    Clause 220 subjects foreign companies that become Indian residents under the Place of Effective Management test to the domestic tax code while allowing the Central Government, by notification, to prescribe exceptions, modifications and adaptations to computation of income, treatment of unabsorbed depreciation, carry forward and set off of losses, collection and anti-avoidance provisions; notifications may apply to succeeding years during assessment, benefits may be withdrawn for non-compliance with prescribed conditions with recomputation and a specified limitation period, and every notification must be laid before Parliament.
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    Grandfathering of concessional tax treatment allows NRIs who become residents to continue concessional taxation on investment income from qualifying foreign-exchange assets if they furnish a contemporaneous written declaration with their return; the benefit endures until the asset is transferred or converted into money. Clause 217 excludes shares in Indian companies and cross-references sections 212-218, while Section 115H refers to Chapter XIIA and includes broader asset coverage. The declaration requirement and the conversion/transfer termination trigger are operative compliance and continuity mechanisms.
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    Clause 216 exempts a Non-Resident Indian from furnishing a return where the taxpayer's Indian income consists solely of investment income and/or long-term capital gains and the tax on that income has been deducted at source under the restructured TDS chapter; absence of either condition renders the exemption inapplicable and return filing mandatory.
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    Taxation of online gaming winnings: a ring fenced flat rate regime with prescribed computation and enhanced reporting obligations.
    Clause 194 creates a distinct tax regime for net winnings from any online game, applying to any person and defining online games broadly. Net winnings must be computed as prescribed, with gaming receipts ring fenced and taxed at a specified flat rate while remaining income is taxed ordinarily. The provision emphasizes definitions aligned with technology statutes and anticipates detailed subordinate rules for aggregation, timing, promotional credits, and interaction with TDS, with limited scope for deductions unless the computation rules provide otherwise.
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    Tax on unexplained income: punitive flat rate and denial of deductions for incomes classified under specified provisions.
    Clause 195 targets income referred to in sections 102-106, applying whether self declared or determined by the Assessing Officer, and mandates taxation of those amounts at a punitive flat rate while the balance income is taxed normally. It further provides an overriding rule that no deduction, allowance, or set off of losses is permitted against the income so classified, thereby preventing taxpayers from reducing liability on such unexplained or unaccounted sums.

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      Comparison of section 301 "Interpretation." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

      10 September, 2025

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      Section 301 Interpretation

      Income-tax Act, 2025

      At a Glance

      The document is Clause 301 of the Income Tax Bill, 2025 (Old Version) titled "Interpretation" within the Chapter on special procedure for assessment of search cases. It supplies definitions and scope for terms such as "block period", "requisition", "requisitioned items", "search", "seized items", "the last of the authorisations" and "undisclosed income". It matters because these definitions frame assessment, seizure and requisition proceedings u/ss 247-248 and related provisions; affected parties include taxpayers subject to search/requisition, authorised officers and the tax department.

      Background & Scope

      Statutory hooks: Clause 301 is situated in the Income Tax Bill, 2025, under the Chapter dealing with "Special procedure for assessment of search cases". It supplies interpretive definitions to be used "in this Chapter". The clause explicitly references sections 247 and 248 (search and requisition) for the operative processes it supports. The Clause provides definitions that govern temporal scope ("block period"), material objects subject to requisition/seizure ("requisitioned items", "seized items"), process milestones ("the last of the authorisations") and the core fiscal concept used in such proceedings ("undisclosed income").

      Statutory Provision Mode

      Text & Scope

      Clause 301 provides definitional scope for terms used in the Chapter:

      • "block period": Aggregate of two components-(i) six tax years preceding the tax year in which the search was initiated or any requisition was made; and (ii) the period from 1 April of the tax year in which the search/requisition was made up to the date of execution of the last authorisation for such search/requisition.
      • "requisition": Requisition of books of account, other documents or any assets u/s 248.
      • "requisitioned items": Books of account, other documents or money, bullion, jewellery or other valuable article or thing requisitioned u/s 248.
      • "search": A search initiated u/s 247.
      • "seized items": Books of account, other documents or money, bullion, jewellery or other valuable article or thing seized u/s 247.
      • "the last of the authorisations": Deemed executed-(i) for search: on conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued, irrespective of whether any seizure is recorded; (ii) for requisition: on actual receipt of the books of account, documents or assets by the Authorised Officer.
      • "undisclosed income": Two limbs-(i) money, bullion, jewellery, virtual digital asset or other valuable article or thing or any expenditure or any income based on entries in books/documents/transactions representing wholly or partly income or property not disclosed for purposes of the Act in respect of the block period; or (ii) any expense, exemption, deduction or allowance claimed under the Act which is found to be incorrect, in respect of the block period.

      Interpretation

      The Clause employs temporal and material markers to delineate the ambit of "undisclosed income" and the period for which such income will be examined ("block period"). The first limb of "undisclosed income" focuses on tangible and intangible assets (including "virtual digital asset") and entries/transactions that reflect nondisclosure. The second limb separately addresses incorrect fiscal claims-expenses, exemptions, deductions or allowances-claimed under the Act. The inclusion of both tangible assets and accounting entries suggests a dual focus on physical seizure and documentary/book-entry analysis within the block period. The text signals that the last panchnama in relation to any person is determinative for the conclusion of a search, thus providing a concrete procedural milestone for the operation of time-bound rules linked to the block period.

      Exceptions/Provisos

      No express exceptions or provisos beyond the two-part structure of the "block period" and the two-limbed definition of "undisclosed income" are included within Clause 301. Specific carve-outs, thresholds or exclusions are Not stated in the document.

      Illustrations

      • Example 1: A search initiated on 15 December of tax year Y (warrants executed for multiple persons) will have block period component (i) the six tax years preceding Y, and (ii) from 1 April of Y to the date recorded as conclusion in the last panchnama-this determines the period within which alleged undisclosed income is assessed.
      • Example 2: Books of account seized u/s 247 containing entries asserting certain expenses claimed as deductions for the block period could be treated as evidence of "undisclosed income" under limb (g)(i) or as an incorrect deduction under limb (g)(ii), depending on factual findings made during assessment.

      Interplay

      Clause 301 repeatedly cross-references sections 247 and 248 for the operative acts of search and requisition. The Clause also depends on "panchnama" as a procedural record to mark the conclusion of search operations. No other Rules, Notifications or Circulars are mentioned in Clause 301. Any application of this Clause in relation to other provisions of the Bill or the Act is Not stated in the document.

      Differences between Clause 301 (Old Version) and Section 301 (Income-tax Act, 2025) and Practical Impact

      • Scope marker/heading: The Bill (Clause 301) uses "In this Chapter"; the Act (Section 301) uses "For the purposes of this Part".
        • Practical impact: Terminology shift (Chapter vs Part) is largely stylistic but may reflect reorganisation of the statute; no substantive legal change is indicated in the texts provided.
      • Definitions added/omitted: The Bill contains explicit definitions of "requisitioned items" and "seized items" (books, documents, money, bullion, jewellery or other valuable articles seized/requisitioned u/ss 247/248). The Act text omits these two separate definitions.
        • Practical impact: Omitting explicit labels for "seized items" and "requisitioned items" in the Act reduces immediate textual clarity about what the statute contemplates when referencing seized or requisitioned property. Procedure and evidential handling that depend on named categories may require reliance on the general description in other clauses or on rules/guidance; this increases potential interpretive work for assessors and advisers.
      • Placement and labelling of "the last of the authorisations": Both texts contain a provision deeming when "the last of the authorisations" is executed, with identical operative sub-clauses for search (conclusion as recorded in last panchnama) and requisition (actual receipt). The Bill lists this at (f) while the Act lists similar text at (d).
        • Practical impact: No substantive change; re-lettering only affects cross-references in other sections and transitional drafting adjustments.
      • "Undisclosed income" formulation: The Bill sets out "undisclosed income" in a two-part structure (g)(i) and (g)(ii): (i) items/entries/transactions representing undisclosed income; or (ii) any expense/exemption/deduction/allowance claimed under the Act which is found to be incorrect. The Act consolidates the concept under (e), merging the two ideas into one continuous sentence and, per the appended note, corrects a typographical error ("or or any" corrected to "or any").
        • Practical impact: Substantively the Act appears to preserve both limbs of the Bill's definition, but the Act's merged wording could affect syntactic clarity and the parsing of whether the second limb is an alternative or a continuation. The corrigenda indicates only a textual correction, not a policy change.
      • Terminology for virtual assets: Both texts expressly include "virtual digital asset" in the list of items capable of constituting undisclosed income.
        • Practical impact: Confirms legislative intent to treat virtual assets on par with traditional valuables in search/requisition contexts.
      • Minor editorial differences: The Bill uses semicolons and clause divisions (a)-(g); the Act uses (a)-(e) with subclauses.
        • Practical impact: Largely drafting-style; may require attention in drafting cross-references and rules.

      Practical Implications

      • Compliance and risk areas: The Clause identifies a multi-year window ("block period") for investigation of undisclosed income, incorporating both the six preceding tax years and the year-of-search period up to the last authorisation. Taxpayers subject to search/requisition must be cognisant that both physical assets (including VDA) and documentary entries for that combined period are within scope.
      • Record-keeping/evidence points: Because "requisitioned items" and "seized items" explicitly include books of account and various forms of valuables, maintaining contemporaneous documentation, clear provenance and substantiation of claimed expenses/exemptions for the block period will be essential. The Clause makes the panchnama the operative record for concluding a search; therefore preservation and contestation of panchnama contents may be critical in subsequent proceedings.

      Key Takeaways

      • Clause 301 defines "block period" as six tax years preceding the tax year of search/requisition plus the part of that tax year up to the last authorisation.
      • Both physical assets (including money, bullion, jewellery and virtual digital assets) and documentary/book entries are captured within "undisclosed income".
      • The Clause separately recognises incorrect claims of expense, exemption, deduction or allowance as constitutive of "undisclosed income".
      • Procedural milestone: the last panchnama (for searches) and actual receipt by Authorised Officer (for requisition) determine the completion of authorisation for temporal calculations.
      • "Requisitioned items" and "seized items" are separately defined to include books of account and valuables, thus clarifying the kinds of materials that can be requisitioned or seized u/ss 247-248.
      • The Clause does not set out exceptions, thresholds, rights of persons from whom items are seized/requisitioned, or detailed procedural safeguards-those are Not stated in the document.
      • References to other legislative instruments, dates of effect, appeals or procedures post-seizure/requisition are Not stated in the document.

      Full Text:

      Section 301 Interpretation

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      ActsIncome Tax