Loading...

⚠ ✕
❮ Top
☎ Help
☰
GST ▸
Central GST ▸
Integrated GST + ▸
UTGST / SGST ▸
GST Case Laws + ▸
Income Tax ▸
Income Tax ▸
Allied (Direct Tax) ▸
Income Tax Case Laws ▸
DTAA ▸
International Taxation ▸
Customs ▸
Customs Act / Rules ▸
Notifications / Forms ▸
Circulars / Tariff ▸
Case Laws / Manual ▸
FTP/SEZ ▸
Foreign Trade ▸
Notifications / Circulars / Appendix / Forms ▸
Special Economic Zone (SEZ) ▸
Corp. Law ▸
Company Laws ▸
Standards / Trusts ▸
Partnership / LLP / Societies ▸
Case Laws ▸
FEMA ▸
FEMA / FCRA ▸
Notifications / Circulars ▸
Manual / FAQ ▸
FEMA Case Laws ▸
SEBI / IBC ▸
SEBI ▸
SEBI Case Laws ▸
IBC ▸
IBC - Case Laws ▸
PMLA ▸
Benami Property ▸
Black Money ▸
Money Laundering ▸
Vivad ▸
Direct Tax ▸
Indirect Taxes ▸
Indian Laws ▸
Indian Laws ▸
Bharatiya Nyaya 2023 ▸
Finance Acts & Bills / Amendment Acts ▸
Case Laws ▸
Labour Laws ▸
Labour Code ▸
Old / Others ▸
Central Excise ▸
Central Excise - Cases ▸
Wealth Tax ▸
Service Tax ▸
Service Tax Cases ▸
CST / DVAT ▸
CST / VAT / Sales Tax ▸
×

By creating an account you can:

Logo TaxTMI
Keyword Search :
AI Tools : New
Ask tax questions in natural language. Powered by AI trained on the TaxTMI legal database. Use AI Tools ➞
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
  6. The system will try to fetch results that contains ALL your words.
  7. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
    8. 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 ✕
🔎 Filters / Advanced Search ❯
TEXT

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

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws---- ❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Case Laws Income Tax
    "Sales Tax Subsidy and Its Classification in Income Tax: Revenue or Capital receipt
    Case Laws Income Tax
    Trust Registration and Tax Exemptions in India: rejection of registration u/s 12AB for want of supp...
    Case Laws Income Tax
    Condonation of Delay in Taxation in filing applications for registration u/s 12A/12AA:
    Case Laws Income Tax
    Navigating Procedural Timelines in Tax Exemption Applications
    Case Laws Income Tax
    Mandatory Draft Assessment Orders for Foreign Entities and Section 144C Compliance: A Legal Perspect...
    Case Laws Income Tax
    The Impact of PAN Mismatch in Corporate Tax Filings and Resolving Name Discrepancies in Tax Document...
    Case Laws Income Tax
    Analyzing the Dispute Over Section 14A Disallowance and Interest under Section 244A in Income Tax Ap...
    Case Laws Income Tax
    Condonation of Delay in Tax Refund: Analyzing the Right to Interest
    Case Laws Income Tax
    Balancing Corporate Operations and Tax Obligations: High Court's Interim Order on Share Buyback Taxa...
    Case Laws Income Tax
    Section 80P and Cooperative Societies: Unraveling the Tribunal's Interpretation
    Case Laws Income Tax
    Supreme Court Upholds High Court's Decision on Tax Evasion Case: An Analysis
    Case Laws Income Tax
    Reassessing Accommodation Entries: Insights from a High Court Judgment
    Case Laws Income Tax
    A Judicial Perspective on Section 148A of the Income Tax Act: Amended Reassessment Provisions
    Case Laws Income Tax
    Threshold set for monetary limits in filing appeals by Revenue: A policy shift towards reducing liti...
    Case Laws Income Tax
    High Court's Stance on Penalty Notices in Tax Law: A Balance Between Procedure and Justice
    Case Laws Income Tax
    Decoding the Penalty Provisions under Section 271(1)(c): Analyzing the Fine Line Between Concealment...
    Case Laws Income Tax
    Levy of penalty under Section 271(1)(c) of the Income Tax Act: Between Legal Intent and Factual Circ...
    Case Laws Income Tax
    Assessing Penalties for non-filing of ITR: A Deep Dive into Section 271F of the Income Tax Act
    Case Laws Income Tax
    Addition after survey option as Unaccounted income: Burden to prove and evidence.
    Case Laws Income Tax
    Decision on Depreciation and Expenditure
❮
❯
❯❯
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:

Open Link
Notes
All › Income Tax
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
Case Laws Income Tax
"Sales Tax Subsidy and Its Classification in Income Tax: Revenue or Capital receipt
Show AI Summary
Sales tax subsidy classification: determine capital versus revenue nature to decide income taxability based on purpose and character.
Whether a sales tax concession under the trade tax statute is a capital receipt or a revenue receipt for income tax purposes turns on the character, purpose and timing of the grant; capital receipts relate to capital formation and are generally non taxable, while revenue receipts arise from regular business operations and are taxable. The inquiry requires statutory interpretation of the trade tax exemption, consideration of legislative intent to incentivise production, and comparison with precedent on subsidy characterisation.
Case Laws Income Tax
Trust Registration and Tax Exemptions in India: rejection of registration u/s 12AB for want of supp...
Show AI Summary
Trust registration under Section 12AB requires evidential compliance; procedural default may prompt re-adjudication and compliance opportunity.
Rejection of registration under Section 12AB arose from insufficient documentary evidence of charitable activity and statutory compliance, and the assessee's non-appearance at the hearing. Emphasising natural justice and the welfare character of exemption provisions, the appellate direction remitted the matter for fresh adjudication to permit the assessee an opportunity to cure evidentiary deficiencies and establish entitlement to tax-related recognition.
Case Laws Income Tax
Condonation of Delay in Taxation in filing applications for registration u/s 12A/12AA:
Show AI Summary
Condonation of delay in tax registration: discretion should favour merits while distinguishing individual acts from entity liability.
Condonation of delay in filing for charitable-registration status must be exercised liberally to secure substantive justice, examining the causes of delay and avoiding punishment of an entity for acts attributable to an individual. Revision of assessment-related orders demands proof that alleged irregularities affected the entity, and a tribunal's factual conclusions are only overturned for perversity if they lack evidentiary support or are manifestly unreasonable.
Case Laws Income Tax
Navigating Procedural Timelines in Tax Exemption Applications
Show AI Summary
Delay condonation in tax-exemption applications: tribunal permits consideration of late Form 10AB filings where circulars create timing ambiguity.
The Tribunal addressed ambiguity in CBDT circulars about time limits for filing Form No.10AB under the 80G framework, recognized practical difficulties for older trusts complying with a rigid six month rule, and applied the principle of condonation of delay-relying on precedent-to require reconsideration by the CIT(Exemption) so that procedural timelines are balanced with substantial justice.
Case Laws Income Tax
Mandatory Draft Assessment Orders for Foreign Entities and Section 144C Compliance: A Legal Perspect...
Show AI Summary
Draft assessment procedure: non-issuance of mandatory draft order can invalidate assessments for foreign entities.
The note explains that foreign companies fall within the category of eligible assessee for the draft-assessment procedure, which requires the assessing officer to issue a draft assessment order allowing objections before finalizing assessment; it emphasizes that failure to comply with this procedure can vitiate the final assessment and that appellate precedents treat such procedural lapses as legally significant.
Case Laws Income Tax
The Impact of PAN Mismatch in Corporate Tax Filings and Resolving Name Discrepancies in Tax Document...
Show AI Summary
PAN-name mismatch in tax filings: liberal administrative relief enables correction where error was inadvertent and non-advantageous.
The dispute arose from a corporate taxpayer filing an income tax return under an outdated company name despite having the correct PAN, resulting in invalidation of the return for failure to rectify within prescribed time. Key legal issues address the scope of administrative discretion under Section 119 to condone delay, the meaning of genuine hardship, and the role of PAN as a unique identifier when names diverge. The court favored a liberal, purposive approach allowing administrative correction of the company name where the error was non-deliberate and no advantage was gained.
Case Laws Income Tax
Analyzing the Dispute Over Section 14A Disallowance and Interest under Section 244A in Income Tax Ap...
Show AI Summary
Section 14A disallowance for stock in trade clarified; refund interest under Section 244A must be applied before adjustments.
The Tribunal held that where investments are held as stock in trade by a bank, disallowance under Section 14A is not appropriate because such holdings are business related trading assets rather than investments to earn exempt dividends; additionally, for Section 244A interest on refunds, interest payable to the assessee must be computed and applied before making adjustments against tax, so earlier refund interest should not be deducted when calculating refund interest due.
Case Laws Income Tax
Condonation of Delay in Tax Refund: Analyzing the Right to Interest
Show AI Summary
Right to interest on tax refunds when delay is condoned depends on whether delay is attributable to the taxpayer.
Right to interest on tax refunds where delay has been condoned turns on whether the delay is attributable to the taxpayer; administrative lapses such as failure to issue TDS documentation or inform the taxpayer are central to entitlement. Precedent imposing an obligation to refund public money received without right, including interest, is applied against provisions limiting interest for belated claims, requiring interpretation of circulars and consistent administrative guidance to protect taxpayer fairness.
Case Laws Income Tax
Balancing Corporate Operations and Tax Obligations: High Court's Interim Order on Share Buyback Taxa...
Show AI Summary
Share buyback taxation: characterisation as dividend or capital gain shapes interim security measures to protect tax recovery.
Whether consideration paid by a company for purchase of its own shares should be treated as a dividend or as capital gain was contested, focusing on the interaction between the additional tax on distributed income and the special capital gains regime for buybacks; the court identified substantial questions of law about the tribunal's classification and ordered provisional financial security measures - partial deposit and property security - with conditional release of liens upon compliance.
Case Laws Income Tax
Section 80P and Cooperative Societies: Unraveling the Tribunal's Interpretation
Show AI Summary
Deduction under section 80P clarifies cooperative societies' banking activity income treatment versus investment income for tax purposes.
Eligibility for cooperative tax deductions depends on the substantive character of activities: income integral to a society's banking operations qualifies for the banking-related deduction, while income from investments or dividends-including dividends from unlisted equities-must be assessed under provisions applicable to investment income and not as banking business income.
Case Laws Income Tax
Supreme Court Upholds High Court's Decision on Tax Evasion Case: An Analysis
Show AI Summary
Reassessment proceedings: disputed factual issues must be decided by assessment authorities, limiting writ-stage factual review.
The Supreme Court's non-interference upholds the principle that disputed factual issues in income-tax reassessment proceedings-including allegations of accommodation entries-are to be decided by the Assessing Officer on merits, not by a writ court, thereby restricting premature factual adjudication in writ jurisdiction and reinforcing the procedural role of assessment authorities.
Case Laws Income Tax
Reassessing Accommodation Entries: Insights from a High Court Judgment
Show AI Summary
Reassessment under Section 148A: disputed factual issues on accommodation entries directed to the assessing officer for factual determination.
The High Court required detailed scrutiny of alleged accommodation entries and the genuineness of share transactions under the reassessment procedure, noting taxpayers' disclosure of income as Short Term Capital Gains. Applying precedents on judicial review, the court held that disputed factual questions and the procedural validity of reassessment are to be determined by the Assessing Officer rather than in writ proceedings, absent evidence of arbitrariness or limitation breach.
Case Laws Income Tax
A Judicial Perspective on Section 148A of the Income Tax Act: Amended Reassessment Provisions
Show AI Summary
Section 148A preliminary enquiry limits inquiry to existence of information before reassessment and preserves assessee procedural rights.
Preliminary enquiries under the post amendment reassessment procedure require the assessing officer to possess tangible information suggesting escaped income and to afford the assessee an opportunity to respond before issuing a reassessment notice; the officer's inquiry at this stage is limited to ascertaining existence of such information and does not adjudicate the merits, while procedural protections-objection, access to information, and appellate remedies-remain available.
Case Laws Income Tax
Threshold set for monetary limits in filing appeals by Revenue: A policy shift towards reducing liti...
Show AI Summary
Monetary limits for appeals reshape Revenue litigation strategy, reducing low stake appeals and encouraging selective prosecution.
The court treated CBDT instructions on monetary limits as possessing binding effect within the statutory appeals framework, harmonising the right to appeal with monetary limit provisions and applying policy considerations from the National Litigation Policy to limit low stake Revenue appeals; this approach affects Revenue litigation strategy, judicial resource allocation, taxpayer relief, and invites possible legislative clarification regarding retrospective or prospective application.
Case Laws Income Tax
High Court's Stance on Penalty Notices in Tax Law: A Balance Between Procedure and Justice
Show AI Summary
Penalty notice specificity: lack of clarity requires proof of actual prejudice before challenging tax penalties.
Penalty notices under Section 271(1)(c) read with Section 274 must clearly communicate the specific charge to secure a fair hearing; failure to object during proceedings may constitute acquiescence. Procedural defects do not invalidate penalty proceedings unless the affected party proves actual prejudice, and the burden of demonstrating such prejudice lies with the party alleging breach of natural justice.
Case Laws Income Tax
Decoding the Penalty Provisions under Section 271(1)(c): Analyzing the Fine Line Between Concealment...
Show AI Summary
Furnishing inaccurate particulars cannot be presumed from mere disallowance; defective notices and bona fide claims constrain penalties.
Penalty for furnishing inaccurate particulars of income requires proof of knowingly misstated or concealed particulars; mere disallowance of a claim does not suffice. A bona fide, arguable claim should not automatically attract penalty, and a defective or unadapted notice that fails to demonstrate application of mind can vitiate penalty proceedings.
Case Laws Income Tax
Levy of penalty under Section 271(1)(c) of the Income Tax Act: Between Legal Intent and Factual Circ...
Show AI Summary
Furnishing inaccurate particulars: claiming non existent depreciation can attract penalty even without willful concealment; notice must be specific.
Claiming depreciation on non existent assets constitutes furnishing inaccurate particulars of income under the penalty provision; proof of willful concealment is not a necessary ingredient for civil penalty liability. Notices initiating penalty proceedings must be specific and clear to meet natural justice requirements, and factual admissions and reversal of disputed claims are operative in determining whether inaccurate particulars were furnished.
Case Laws Income Tax
Assessing Penalties for non-filing of ITR: A Deep Dive into Section 271F of the Income Tax Act
Show AI Summary
Failure to file return on time triggers penalty under Section 271F even if return is later filed after reassessment notice.
The summary addresses penalty liability for failing to file the original income tax return by the statutory due date, noting that later filing in response to a reassessment notice does not excuse the late original filing. It emphasizes that initiation of penalty proceedings after completion of reassessment does not automatically vitiate the penalty, and that absence of a valid reason for delay sustains penal consequences under the provision for non-filing.
Case Laws Income Tax
Addition after survey option as Unaccounted income: Burden to prove and evidence.
Show AI Summary
Burden to prove unaccounted income: additions require admissible evidence, not assumptions from survey reports.
Burden to prove alleged unaccounted income lies with the revenue; additions based on survey findings and an Inspector's report to re fix sale prices must be supported by admissible evidence. The taxpayer used the percentage of completion method for construction income, and impounded documents from a statutory survey were central to the dispute. Additions founded mainly on assumptions or inspector notes, without corroborative proof linking seized material to unexplained receipts, are susceptible to appellate review.
Case Laws Income Tax
Decision on Depreciation and Expenditure
Show AI Summary
Depreciation on aircraft recognized when operational preparations precede airworthiness certificate, affecting tax depreciation timing.
The tribunal treated preparatory expenditures to make a newly acquired aircraft operational as integral to business activity for determining the timing of depreciation, remitted the classification and amortisation of engine improvement and overhaul costs to the assessing officer, allowed component replacement and repair costs as revenue deductions because they did not extend useful life, and confirmed that interest on TDS is not an allowable deduction.

TMI Notes

All › Income Tax
Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Home › TMI Notes › Income Tax › Act-Rules › Category › This
Back

All TMI Notes

Income Tax

Comparison of SCHEDULE II "INCOME NOT TO BE INCLUDED IN TOTAL INCOME" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

17 September, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

Print Options

SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Income-tax Act, 2025

At a Glance

SCHEDULE II sets out classes of income that are excluded from "total income" for income-tax purposes. The Bill (Old Version) and the enacted Act differ in several material respects affecting life-insurance exclusions, pension/NPS entries, references to International Financial Services Centre (IFSC) entities, and the inclusion of equalisation-levy income. Affected parties include policyholders, insurers, employers, employees, pension subscribers, IFSC entities and tax authorities. Effective dates are stated within specific entries (for example, policy issue periods and 1 April 2002/2023) where provided; no single overarching commencement date for the Schedule is stated in the Bill text.

Background & Scope

Statutory hook: SCHEDULE II (See section 11) - "Income not to be included in total income." The Schedule lists categories of exempt income (column B) subject to conditions (column C). Definitions and notes at the end assign meanings to terms used in the table. The Bill (Old Version) is the source document for this commentary. Any differences vis-`a-vis the enacted Act are identified only insofar as both texts were provided; where a detail is absent in the Bill text, the phrase "Not stated in the document." has been used.

Statutory Provision Mode

Text & Scope

The Schedule enumerates 16 heads of income excluded from total income, including: agricultural income; sums under life-insurance policies (with sub-conditions tied to period of issue, premium-to-sum-assured ratios and aggregate premium ceilings); provident fund and recognised provident fund payments (with carve-outs for interest on large contributions on/after 1 April 2021); payments under Sukanya Samriddhi, National Pension System (NPS) Trust, Agniveer Corpus Fund, approved superannuation funds; scholarships; awards/rewards instituted or approved by government; interest or other receipts on specified government securities and deposits; interest on gold bonds/certificates; interest on bonds issued by local authorities or State Pooled Finance Entities; income on transfer of certain UTI units; income chargeable to equalisation levy (new insertion); and specific categories u/s 10(15) and related provisions of the 1961 Act as applicable.

Interpretation

The text frames exclusions as conditional: each head is subject to prescribed conditions and definitions in accompanying notes. Legislative intent, as discernible from the Bill text, is to preserve traditional exemptions (agriculture, certain pensions, scholarships, specified government securities) while tightening or clarifying tax-exempt treatment for life-insurance receipts and retirement/savings vehicles by reference to issue dates, premium ratios, aggregate premium ceilings and contribution thresholds. The insertion of equalisation-levy related exclusion (Sl. No. 15) signals explicit recognition of overlap between equalisation-levy chargeability and income-tax neutrality for certain cross-border digital services.

Exceptions/Provisos

Key carve-outs and conditions provided in the Bill include:

  • Life-insurance sums excluded only if policies meet period-specific premium-to-sum-assured ratios and, for certain periods, aggregate premium ceilings (Rs. 2,50,000 or Rs. 5,00,000) - and certain sums (section 127 receipts; Keyman policies) are expressly ineligible.
  • Portions of interest on provident fund/recognised provident fund balances attributable to contributions on/after 1 April 2021 are not eligible for exclusion where contributions exceed specified thresholds (Rs.5,00,000 / Rs.2,50,000) and the amount not excluded is to be computed as prescribed.
  • NPS payments excluded only to the extent they do not exceed 60% of the total amount payable on closure/opt-out.
  • Approved superannuation fund payments are exempt only in specified circumstances (death, commutation at retirement/age, refund in limited cases, transfer to specified pension schemes).
  • Equalisation-levy related incomes are excluded only where not chargeable as royalty/FTS in India under agreements notified u/s 159 (explicit exception in Sl. No. 15).

Illustrations

  • Example 1: A unit-linked life policy issued on 1 Oct 2023 with annual premium such that premium-to-sum-assured ratio is 12% and aggregate premium per tax year is Rs.2,00,000 - the Bill permits exclusion if it meets the Item 2 conditions (unit-linked post-1-April-2023: ratio <=15% for special, <=10% for others; aggregate <=Rs.2,50,000 for ULIP). Whether treated as "special policy" depends on disability/disease status u/rs - Not stated in the document.
  • Example 2: An employee receives accumulated recognised provident fund balance including interest attributable to contributions of Rs.6,00,000 made on/after 1 April 2021 in a year when no employer contribution was made - interest attributable to that contribution is not eligible for exclusion (threshold exceeded Rs.5,00,000); the portion not excluded to be computed as prescribed (procedure Not stated in the document).

Interplay

The Bill references other statutory instruments and provisions: Section 11 (hook), Section 127 (for life-insurance ineligibility), Schedule XI para 8, Schedule XV (definition of "actual capital sum assured"), Insurance Regulatory regulations, the Provident Funds Act, Government Savings Promotion Act (Sukanya Samriddhi), Dept. notifications regarding NPS (notifications not reproduced in the Bill text), Finance Act, 2016 (equalisation levy Chapter VIII) and section 159 agreements. The Bill contemplates Board guidelines for removal of difficulties. Where computation methods are required ("as prescribed"), the Bill defers to rules/regulations; these procedural details are Not stated in the document.

Differences between the Bill (Old Version) and the Enacted Act - Practical Impact

Topic Bill (Old Version) Act (2025) - Differences & Practical Impact
Reference to IFSC in life-insurance entry Exclusion clause expressly excludes policies issued by "International Financial Services Centre insurance intermediary office" from the general test; IFSC office language appears within clause (a).

The Act broadens IFSC coverage differently (references to "International Financial Services Centre Insurance Office") and later adds a special carve-out that aggregate premium conditions do not apply to policies issued on or after 1 April 2025 by the IFSC Insurance Office.

Practical impact: IFSC-issued policies post-1-Apr-2025 enjoy relaxed aggregate-premium limits under the Act versus the Bill - this benefits IFSC policyholders and insurers.
Section reference for ineligible insurance sums Ineligibility lists section 127 (no subsection reference) and Keyman policies.

The Act specifies "section 127(4)" as ineligible; this narrows or clarifies which portion of section 127 is meant.

Practical impact: narrower/clearer exclusion scope for section 127 receipts, reducing interpretive ambiguity.
Aggregate premium thresholds for policies issued on/after 1-Apr-2023 ULIPs: aggregate <=Rs.2,50,000; other policies: aggregate <=Rs.5,00,000.

The Act restates these ceilings but then adds the IFSC carve-out for policies issued on/after 1-Apr-2025.

Practical impact: domestic policyholders unchanged, IFSC policyholders gain advantage.
NPS-related entries (Sl. Nos. 15 & 16) The Bill lacks specific entries for "lump sum amount" defined by a particular notification and for Unified Pension Scheme subscriber-specific references.

The Act adds two discrete entries (Sl. Nos. 15 and 16) dealing with NPS payments to Unified Pension Scheme subscribers and "lump sum amount" per a departmental notification dated 24 Jan 2025.

Practical impact: greater specificity and targeted exemption for Unified Pension Scheme subscribers under NPS, linking to a concrete notification (FX-1/3/2024-PR). This reduces uncertainty for affected NPS subscribers.
Equalisation levy income Bill includes Sl. No. 15 addressing income chargeable to equalisation levy.

The Act omits the Bill's Sl. No. 15 equalisation-levy entry or shifts numbering; comparison shows the Act instead includes other NPS-related items.

Practical impact: the treatment of equalisation-levy incomes requires reconciliation between Act text and prior Bill; taxpayers relying on the Bill's exclusion must verify the final Act wording (Not stated in the document).

Practical Implications

  • Compliance and risk areas: Life-insurance exclusions carry detailed temporal and quantitative conditions (period of issue, premium-to-sum-assured ratio, aggregate premium ceilings). Insurers and policyholders must verify issue date classifications and compute premium ratios and aggregate premiums across the policy term. The explicit ineligibility for keyman policies and section 127 receipts increases scrutiny over policy ownership and assignment.
  • NPS and provident fund entries impose record-keeping obligations: authorities and subscribers must track contributions made on or after 1 April 2021 separately, and identify portions of interest attributable to contributions exceeding thresholds. The method of computing the amount not excluded is left to prescribed rules - until rules are notified, potential uncertainty persists.
  • Equalisation-levy clause (Sl. No. 15): taxpayers and digital service providers should reconcile equalisation-levy exposure and Income-tax chargeability; the clause excludes income chargeable to equalisation levy except where the income is otherwise taxable in India as royalty/FTS under notified agreements (thus creating an interplay with tax treaty determinations and notifications u/s 159).
  • IFSC references: the Bill treats certain IFSC insurance intermediary office receipts differently in the life-insurance entry (exclusion/inclusion language differs versus the Act). Parties operating within IFSCs should note the special treatment and any administrative guidance forthcoming.
  • Procedural uncertainty: multiple entries defer to "as prescribed" computations and to notifications by the Central Government; until those are issued, taxpayers face interpretation and compliance risk. The Board's power to issue binding guidelines (with Central Government approval) is preserved, indicating administrative rule-making will shape practical application.

Key Takeaways

  • The Bill retains traditional exemptions (agriculture, scholarships, certain pension/retirement receipts) while imposing quantified tests on insurance exclusions (period-specific ratios and aggregate premium ceilings).
  • Interest on provident fund balances attributable to large post-1-April-2021 contributions is explicitly excluded from exemption, with thresholds (Rs.5,00,000 / Rs.2,50,000) and prescribed computation methods.
  • Equalisation-levy related income is newly addressed - excluded except where taxable in India as royalty/FTS under notified agreements.
  • Certain specific sums are expressly excluded from insurance exemption (section 127 receipts; Keyman insurance), tightening the prior broader language.
  • Several entries defer key operational questions to rules/notifications; substantial administrative guidance is required to operationalise the Schedule.

Full Text:

SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Topics

Acts Income Tax
Next ➔