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

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

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Circulars Service Tax
    How will the SBC be calculated for services under reverse charge mechanism?
    Circulars Service Tax
    Whether SBC is a ‘Cess’ on tax’ and we need to calculate SBC @ 0.50% on the amount of service ...
    Circulars Service Tax
    What would be effective rate of service tax and SBC post introduction of SBC?
    Circulars Service Tax
    Whether separate accounting code will be there for Swachh Bharat Cess
    Circulars Service Tax
    Whether SBC would be required to be mentioned separately in invoice?
    Circulars Service Tax
    How will the SBC be calculated?
    Circulars Service Tax
    Where will the money collected under SBC go?
    Circulars Service Tax
    Why has SBC been imposed?
    Circulars Service Tax
    Whether SBC would be leviable on exempted services and services in the negative list?
    Circulars Service Tax
    What is the date of implementation of SBC?
    Circulars Service Tax
    What is Swachh Bharat Cess (SBC)?
    Manuals Income Tax
    STEPS NEED TO BE TAKEN AFTER APPROVAL ADVANCE PRICING AGREEMENT(APA)?
    Manuals Income Tax
    What is the limit of PANCARD regarding payment to Life Insurance company ?
    Manuals Income Tax
    What is the basic monetary limit required for PANCARD for amount deposit in mutual fund and shares?
    Manuals Income Tax
    What is the basic limit for PANCARD for payment to foreign country?
    Manuals Income Tax
    Whether PANCARD is require for opening account in bank?
    Manuals Income Tax
    What is the limit of PANCARD for amount depositing in securities.?
    Manuals Income Tax
    Is PANCARD is required for time deposit exceed a time of ₹ 5 lakhs?
    Manuals Income Tax
    What is the Basic limit of PANCARD for sale purchase of immovable property?
    Manuals Income Tax
    Is Permission is Required For Filing Of Revised Return?
❯❯
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
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess reverse charge shifts liability to the service recipient, applying existing reverse charge notifications mutatis mutandis.
Swachh Bharat Cess for services under reverse charge is payable by the service recipient: Chapter V provisions apply to SBC, and government notification makes the existing service tax reverse charge notification applicable to SBC mutatis mutandis, so recipients compute and discharge SBC under the same reverse charge rules.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess: not levied on service tax but imposed on the value of taxable services.
The Swachh Bharat Cess is not a cess on service tax but is imposed as a separate charge measured on the value of taxable services, rather than being calculated on the amount of service tax as was done for Education Cess and SHE Cess.
Circulars Service Tax
Show AI Summary
Service tax plus Swachh Bharat Cess yields a combined rate after SBC introduction, affecting taxable services.
The operative tax burden on taxable services equals the prevailing service tax rate plus the Swachh Bharat Cess, expressed in the FAQ as an additive formula (for example, service tax rate plus 0.5% SBC) to determine the overall effective rate after SBC's introduction.
Circulars Service Tax
Show AI Summary
Separate accounting code for Swachh Bharat Cess to be notified, creating distinct heads for collection, receipts, penalties and refunds.
Separate accounting codes for the Swachh Bharat Cess will be notified in consultation with the Principal Chief Controller of Accounts, establishing distinct minor head classifications to record cess Tax Collection, Other Receipts, Penalties and Deduct Refunds with corresponding numeric codes for government accounting.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess must be shown separately on invoices and accounted for independently from service tax.
Swachh Bharat Cess (SBC) is levied independently of service tax and must be charged, collected and paid separately; it should appear as a distinct line item on invoices (may be shown after service tax), be accounted for separately in books of account, and remitted under a separate accounting code, with treatment similar to education cesses.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess calculation mirrors service tax and is levied on the identical taxable value.
The Swachh Bharat Cess is computed using the same methodology as service tax and is levied on the identical taxable value applied for service tax, with no separate valuation base or distinct computation formula for the Cess.
Circulars Service Tax
Show AI Summary
Proceeds of Swachh Bharat Cess credited to Consolidated Fund of India, usable after parliamentary appropriation for sanitation initiatives.
Proceeds of the Swachh Bharat Cess are to be credited to the Consolidated Fund of India, and after parliamentary appropriation the Central Government may utilise such sums for financing and promoting Swachh Bharat initiatives or for related purposes.
Circulars Service Tax
Show AI Summary
Swachh Bharat cess imposed to finance and promote sanitation initiatives, obliging service providers to collect and remit the levy.
Imposition of Swachh Bharat Cess is a statutory levy on taxable services to generate revenue expressly for financing and promoting Swachh Bharat initiatives and related purposes, creating an obligation on service providers to collect and remit the cess so funds are available for the designated sanitation objectives.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess on exempted and negative list services is not leviable under the FAQ circular.
The circular clarifies that Swachh Bharat Cess is not leviable on services which are fully exempt from service tax and on services covered by the negative list, limiting the cess's chargeability to taxable services only.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess implementation date fixed as 15 November 2015 under notification appointing its commencement.
The Central Government appointed 15 November 2015 as the date on which provisions of the Swachh Bharat Cess come into effect, by notification No.21/2015 Service Tax dated 6 November 2015.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess applies as a service cess on taxable services, increasing service tax liability and compliance obligations.
Swachh Bharat Cess is a statutory cess levied as a service cess under Chapter VI of the Finance Act, 2015, imposed on all taxable services and collected in accordance with the Act's levy and collection provisions, thereby increasing service tax liability and requiring compliance with service tax accounting and remittance rules.
Manuals Income Tax
Show AI Summary
Advance Pricing Agreement requires modified returns and extends reassessment deadlines for affected assessment years by tax authorities.
Entry into an Advance Pricing Agreement fixing the arm's length price requires the taxpayer to file a modified return for each affected assessment year within three months from the end of the month in which the APA is executed. If an assessment was already completed, the Assessing Officer must reassess under the APA and complete that reassessment within one year from the end of the financial year in which the modified return is filed. If the assessment was pending, the Assessing Officer may complete it within an extended timeframe permitted for APA-related assessments.
Manuals Income Tax
Show AI Summary
PAN requirement for life insurance premium payments: quoting PAN mandatory when annual premiums meet statutory threshold.
A payer must quote PAN when annual payments of life insurance premium to an insurer aggregate to Rs. 50,000 or more, the aggregation determining whether the PAN quoting obligation is triggered as a compliance mechanism for identification and reporting of premium payments.
Manuals Income Tax
Show AI Summary
PAN requirement for mutual fund and share deposits triggers mandatory identification and reporting when payments reach the statutory threshold.
Quoting a Permanent Account Number (PAN) is mandatory for deposits into mutual funds and for share purchases when the payment amount is fifty thousand rupees or more, under the PAN provisions and implementing rules governing income-return and reporting obligations.
Manuals Income Tax
Show AI Summary
PAN requirement for foreign travel payments: cash disbursements above prescribed limit require PAN for travel, tour, or currency purchases.
A PAN must be furnished where a single-instance cash payment connected with travel to a foreign country exceeds the prescribed cash threshold; this covers cash payments for fare, payments to travel agents or tour operators, payments to authorized persons under foreign exchange law, and purchases of foreign currency, while excluding travel to neighbouring countries and specified pilgrimage locations.
Manuals Income Tax
Show AI Summary
Permanent Account Number requirement: PAN is mandatory for opening bank accounts under income tax rules with no monetary threshold.
Permanent Account Number (PAN) is mandatory for opening a bank account under the income tax statutory framework and implementing rules; the requirement applies generally and the source does not specify any monetary threshold limiting the obligation, reflecting PAN's function as an identification and compliance mechanism in return of income and assessment procedure contexts.
Manuals Income Tax
Show AI Summary
PAN requirement for securities transactions mandates furnishing PAN for deposits exceeding prescribed threshold to enable identity verification.
A PAN furnishing requirement applies to sale and purchase of securities: where consideration in a securities transaction exceeds the statutory high-value threshold, the person transacting must furnish their Permanent Account Number to the counterparty, implementing identity verification and enabling tax reporting obligations under the income-tax rules.
Manuals Income Tax
Show AI Summary
PAN requirement for time deposits: PAN must be furnished when a time deposit exceeds the prescribed regulatory threshold.
A PAN must be furnished when a depositor makes a time deposit with a bank, banking company, or banking institution that exceeds the prescribed monetary threshold; this imposes an identification and reporting obligation under the income tax PAN provisions and rules.
Manuals Income Tax
Show AI Summary
PAN requirement for immovable property transactions: PAN must be furnished where property value meets the statutory threshold.
A Permanent Account Number (PAN) must be furnished for sale or purchase of immovable property when the transaction reaches the statutory value threshold, as part of PAN-related obligations in return of income and assessment procedure; this requirement applies to parties to the transaction to ensure tax documentation and compliance.
Manuals Income Tax
Show AI Summary
Right to file revised return: no prior permission required and permission-application cannot substitute for revision.
No prior permission is required to file a revised return; the assessee has a right to submit a revised return. An application framed as seeking permission to revise the originally filed return cannot be treated as, or substitute for, a valid revised return, and therefore does not meet the statutory mechanism for revision.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Back

All TMI Notes

whatsapp Join Channel
Showing Results for : Reset Filters

Comparison of section 341 "Application of income." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

11 September, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

Section 341 Application of income

Income-tax Act, 2025

At a Glance

Clause 341 of the Income Tax Bill, 2025 (Old Version) sets out what constitutes permissible application of income by registered non-profit organisations. It matters to charitable/religious trusts and registered non-profit organisations, and to tax authorities monitoring compliance with application-of-income conditions. Effective date/decision date: Not stated in the document.

Background & Scope

Statutory hook: Clause 341 of the Income Tax Bill, 2025 (Old Version) addressing "Application of income" of a registered non-profit organisation. Context: governs what sums may be treated as application of income for non-profit organisations to ascertain compliance with conditions for tax treatment. Coverage: sums applied for charitable/religious purposes in India, donations to other registered non-profits, corpus donations, reinvestment of corpus in permitted modes u/s 350, repayment of loans/borrowings, and exclusions. Definitions or further explanations: Not stated in the document beyond references to sections 35(b)(i), 36(4)-(7), and section 350.

Statutory Provision Mode

Text & Scope

Clause 341, Income Tax Bill, 2025 (Old Version) sets out what sums are to be allowed as "application of income" to a registered non-profit organisation. The provision identifies three categories in sub-section (1): (a) sums applied for charitable or religious purposes in India for which the organisation is registered (subject to payment during the tax year and allowability under specified sections), (b) 85% of donations made to other registered non-profit organisations, and (c) nil with respect to corpus donations to other registered non-profit organisations. Sub-section (2) includes reinvestments into permitted corpus modes and repayments of loans/borrowings within five years (subject to conditions including no prior violation and application post 31 March 2021) as application of income. Sub-section (3) excludes from application: depreciation/allowances claimed in respect of an asset acquisition already treated as application of income and set off/allowance of excess application from prior years. Sub-section (4) states that application from corpus, loan/borrowing, accumulated income, specified income or deemed accumulated income shall not be considered as application for the purpose of sub-sections (1) and (2).

Interpretation

The text links the concept of "application of income" to both timing (payment during the tax year) and substantive allowability u/ss 36(4)-(7) and 35(b)(i). Legislative intent apparent from the text is to restrict qualifying applications to sums that are both paid and allowable under income tax rules, and to avoid treating corpus transfers as qualifying applications. The Bill articulates a cross-reference approach whereby existing tax-law tests (sections 35 and 36 provisions) determine allowability. The inclusion of a prescribed percentage treatment for donations to other registered organisations (85%) indicates a legislative policy to permit a substantial portion of inter-charity donations to count as application while retaining a residual disallowance (15%).

Exceptions/Provisos

Explicit exceptions in the Bill text: corpus donations to other registered non-profit organisations are treated as nil for application purposes. Sub-section (3) excludes depreciation/allowances already claimed and set off of earlier excess applications. Sub-section (4) excludes application from corpus, loan/borrowing, accumulated income, specified income or deemed accumulated income for the purposes of sub-sections (1) and (2). There are conditional provisos in sub-section (2) requiring reinvestment or repayment within five years and that the original application from corpus or loan/borrowing be post-31 March 2021 and compliant with the Part.

Illustrations

  • Example 1 - Direct application: A registered trust pays Rs. 1,000,000 during the tax year for a charitable program for which it is registered, and the payment is allowable u/ss 36(4)-(7) and 35(b)(i). That sum would qualify as application of income under sub-section (1)(a).
  • Example 2 - Donation to another registered organisation: A registered society donates Rs. 100,000 to another registered society. Under sub-section (1)(b), 85% (i.e. Rs. 85,000) would count as application of income; under sub-section (1)(c) corpus components would count as nil if the payment is a corpus donation.
  • Example 3 - Reinvestment from corpus: Not stated in the document whether a trust that re-invests corpus within five years will satisfy other procedural prerequisites beyond those listed; the Bill requires reinvestment within five years and that the original corpus application be after 31-03-2021 with no violations. Specific permitted modes are referred to section 350 (modes) but details of those modes are Not stated in the document.

Interplay

The clause expressly refers to and depends upon sections 35(b)(i), 36(4)-(7) and section 350 for determining allowable payments and permitted modes of investment. It also cross-refers to "this Part" and corresponding provisions of the Income-tax Act, 1961 for compliance history. Specific rules, notifications or circulars beyond these textual cross-references are Not stated in the document.

Differences between the two provisions and practical impact

  • Explicit treatment of corpus donations paid to other organisations:

    • Bill (Clause 341, Document 2): sub-clause (1)(c) expressly states "nil, with respect to any sum paid as a corpus donation to any other registered non-profit organisation."
    • Act (Section 341, Document 1): sub-section (3)(c) provides that "any sum paid as a corpus donation to any other registered non-profit organisation" shall not be allowed as application of income (i.e., it is listed among claims not allowed).
    Practical impact: Both texts in effect disallow treating corpus donations to other registered entities as application of income, but the Bill states the position as a component of what is allowed (explicitly allowing "nil"), while the Act lists it among exclusions. Substance is similar; the Bill's expression is potentially clearer as a standalone rule, whereas the Act's placement in exclusions may be read as reinforcing general illegibility for application treatment.
  • Order and wording of paid sums qualifying as application:

    • Bill (Document 2): sub-section (1)(a) requires the sum be "paid during such tax year" and "such payment is allowable u/ss 36(4), (5), (6) and (7) and 35(b)(i)."
    • Act (Document 1): sub-section (1)(a) provides similar requirements but phrases them as "where such sum is paid during the tax year provided that the provisions of section 35(b)(i) and section 36(4), (5), (6), and (7) shall apply in respect of such sum."
    Practical impact: No substantive difference in the qualifying conditions; the Act's language places emphasis on the applicability of the identified sections, while the Bill is more prescriptive that payment during the year and allowability under those sections are required. Both link allowability u/ss 35/36 to qualification as application.
  • Deemed application (85% rule and deemed application mechanics):

    • Bill (Document 2): does not contain provisions comparable to Section 341(5)-(8) of the Act concerning the 85% of regular income requirement, shortfall treatment as deemed application, timing for application of deemed application, and exercise of option.
    • Act (Document 1): contains sub-sections (5)-(8) establishing an 85% regular income normative target, permitting registered organisations to elect to treat shortfall as deemed application, specifying timing rules for application, and prescribing exercise of option on or before the due date u/s 263(1) for furnishing return of income.
    Practical impact: The Act introduces a compliance mechanism (85% of regular income) and a deemed application regime with procedural timings. The Bill version lacks this constructive mechanism; therefore, under the Bill an organisation's failure to apply regular income to the extent of 85% would not be remedied by deeming (unless other provisions exist elsewhere). The Act increases formal compliance burdens and provides a remedy (option) to treat shortfall as application within specific timelines; omission from the Bill means those procedural obligations/benefits are not present in the Bill text as reproduced.
  • Capital gains treated as application:

    • Bill (Document 2): contains no counterpart to the Act's sub-sections (9) and (10) dealing with capital gains from transfer of capital assets held for charitable or religious purposes and definitions such as "appropriate fraction," "cost of transferred asset," and "net consideration."
    • Act (Document 1): specifies when capital gains on transfers of trust property are deemed application (full or fractional amounts) and provides definitions for key terms used in that analysis.
    Practical impact: The Act creates a clear statutory rule treating certain capital gains as application of income when proceeds are reinvested in qualifying capital assets; the Bill lacks such rules, leaving potential ambiguity regarding tax treatment of capital gains arising to trusts. The Act's rules may aid in tax neutrality for reinvestment of trust assets; absent that, the Bill would leave organisations reliant on other provisions or administrative guidance.
  • Express exclusions and structuring differences:

    • Bill (Document 2): The exclusions list in sub-section (3) comprises clauses (a) and (b) (depreciation/allowance previously claimed as application; set off of excess application), but does not include clause (c) of the Act (which there is included in Act sub-section (3)(c)).
    • Act (Document 1): explicitly includes three exclusions (a), (b), (c) in sub-section (3), making the treatment of corpus donations as excluded clearer within the exclusions list.
    Practical impact: The Act's exclusions list is more exhaustive. The Bill's omission (as presented) could cause interpretive uncertainty until clarified by other provisions or parliamentary amendments.

Practical Implications

  • Compliance and risk areas: The requirement that payments be "paid during such tax year" and be allowable under the cross-referenced sections imposes evidentiary and timing burdens on registered non-profit organisations to substantiate payments and their tax allowability. The 85% rule for donations to other registered entities creates a mathematical step for accounting and tax reporting; organisations must track whether payments are corpus or non-corpus to determine whether 85% or nil applies.
  • Record-keeping/evidence: Organisations will need contemporaneous payment evidence (ledgers, bank payment instruments), documentation demonstrating allowability u/ss 35/36, clear characterisation of donations as corpus or revenue, and records of repayments or reinvestments into permitted modes (section 350) within five-year periods where applicable. The Bill's five-year windows and post-31-03-2021 condition require maintenance of historical compliance records showing no violations.

Key Takeaways

  • Clause 341 defines what counts as application of income for registered non-profit organisations, linking allowability to sections 35 and 36 and to timing of payment.
  • Donations to other registered organisations are partly recognised (85%) except corpus donations which are expressly treated as nil.
  • Reinvestment into permitted corpus modes and repayment of loans may be treated as application if made within five years and subject to compliance conditions and post-31-03-2021 applicability.
  • Certain claims (depreciation/allowances already claimed as application; set off of earlier excess application) are excluded from being treated as application.
  • The clause depends on other provisions (sections 35, 36 and 350) for definitions and modalities; practical compliance requires careful recordkeeping.
  • Compared with the enacted Section 341, the Bill (old version) omits the deemed-application (85% regular income) mechanism and capital-gains-deemed-application rules present in the Act.

Full Text:

Section 341 Application of income

Topics

Acts Income Tax