Just a moment...

⚠✕
❮ Top
☎ Help
☰
×

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 characters0/2000
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 ✕
🔎 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 RulesBills
    Assessing Officer's Duty to Notify Losses : Clause 291 of the Income Tax Bill, 2025 Vs. Section 157 ...
    Act RulesBills
    Statutory mechanism for the modification and revision of demand notices : Clause 290 of Income Tax B...
    Act RulesBills
    Examination of Notice of Demand Provisions in Indian Tax Statutes : Clause 289 of the Income Tax Bil...
    Act RulesBills
    Procedural Amendments and Rectification under Indian Income Tax Law : Clause 288 of Income Tax Bill,...
    Act RulesBills
    Procedural Safeguards and Rectification under Indian Tax Law : Clause 287 of the Income Tax Bill, 20...
    Act RulesBills
    Reforming Assessment Timelines of assessment, reassessment, and recomputation of income : Clause 286...
    Act RulesBills
    procedural aspects of assessment, reassessment, and recomputation where income has allegedly escaped...
    Act RulesBills
    From Faceless Assessment to Executive Schemes : Clause 532 of the Income Tax Bill, 2025 Vs. Section ...
    Act RulesBills
    Authority and Accountability in Reopening Assessments : Clause 284 of the Income Tax Bill, 2025 Vs. ...
    Act RulesBills
    Expanding the Framework for Assessment in Consequence of Appellate Orders : Clause 283 of the Income...
    Act RulesBills
    The Changing Landscape of Reassessment Notices in Indian Tax Law : Clause 282 of Income Tax Bill, 20...
    Act RulesBills
    The New Framework for Reassessment Notices, Balancing Revenue Powers and Taxpayer Rights : Clause 28...
    Act RulesBills
    Modernizing the Reassessment Notice Regime in Indian Income Tax Law : Clause 280 of the Income Tax B...
    Act RulesBills
    Procedural and Substantive Shifts in Income Escaping Assessment : Clause 279 of Income Tax Bill, 202...
    Act RulesBills
    Timing of Income Recognition of Compensation and Incentives : Clause 278 of Income Tax Bill, 2025 Vs...
    Act RulesBills
    Valuation of Inventory and Securities under Indian Tax Law : Clause 277 of the Income Tax Bill, 2025...
    Act RulesBills
    Legal Framework and Practical Impact of Method of Accounting under Indian Income Tax : Clause 276 of...
    Act RulesBills
    Comparative Legal Analysis of the DRP Mechanism : Clause 275 of the Income Tax Bill, 2025 Vs. Sectio...
    Act RulesBills
    Procedures and Legal Safeguards of "impermissible avoidance arrangements" (IAAs) : Clause 274 of the...
    Act RulesBills
    Future of Faceless Assessment :Clause 273 of the Income Tax Bill, 2025 Vs. Section 144B of 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:

    Open Link
    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    Act RulesBills
    Assessing Officer's Duty to Notify Losses : Clause 291 of the Income Tax Bill, 2025 Vs. Section 157 ...
    Show AI Summary
    Intimation of loss: AO must issue written notification to enable carry forward and set-off of assessed losses.
    Clause 291 requires the Assessing Officer to notify the assessee by written order of the amount of loss computed for specified loss heads where a loss is established during assessment and is eligible for carry forward and set-off under the Bill; the written notification is the formal basis for claiming loss benefits in subsequent years, while the clause omits an express timeline, remedies for non-notification, and explicit treatment of appeal or rectification.
    Act RulesBills
    Statutory mechanism for the modification and revision of demand notices : Clause 290 of Income Tax B...
    Show AI Summary
    Modification of tax demand notices: AO must revise demands to reflect insolvency orders and subsequent appellate modifications.
    Clause 290 requires the Assessing Officer to serve a modified demand notice treated as a demand under the restructured Act where an earlier demand is reduced by an order under the Insolvency and Bankruptcy Code, covering tax, interest, penalty, fine or any other sum, and mandates further revision if the insolvency order is altered on appeal.
    Act RulesBills
    Examination of Notice of Demand Provisions in Indian Tax Statutes : Clause 289 of the Income Tax Bil...
    Show AI Summary
    Notice of demand: modernised formal notice and deferment for start up share compensation, aligning tax timing with liquidity events.
    Notice of demand is the statutory precondition for recovery: Clause 289(1) mandates issuance in a prescribed form for any payable sum following an order; Clause 289(2) deems certain system-generated intimations equivalent to notices to streamline automated recovery; Clause 289(3) defers tax on specified securities or sweat equity for eligible start-up employees until defined liquidity or employment-trigger events, thereby aligning tax payment timing with cash realization.
    Act RulesBills
    Procedural Amendments and Rectification under Indian Income Tax Law : Clause 288 of Income Tax Bill,...
    Show AI Summary
    Rectification of assessments: new provision expands AO authority to amend orders for subsequent events and compliance.
    Clause 288 consolidates and prescribes time-bound powers for Assessing Officers to amend assessment orders when subsequent judicial, administrative or factual events render original assessments incorrect, covering partner/AOP adjustments, recomputation for carry-forward losses, capital gains recharacterisation, foreign tax credit, TDS credit timing, transfer pricing amendments and related categories, with generally four-year limitation periods and an emphasis on digital procedural integration.
    Act RulesBills
    Procedural Safeguards and Rectification under Indian Tax Law : Clause 287 of the Income Tax Bill, 20...
    Show AI Summary
    Rectification of mistakes apparent from the record: updated authority scope, procedural safeguards, and prescribed timelines ensure corrective relief.
    Clause 287 empowers income-tax authorities to rectify mistakes apparent from the record by amending orders and specified intimations, subject to the exclusion of matters already considered in appeal or revision. Rectification may be initiated suo motu or on application, but any amendment increasing liability requires prior notice and a reasonable opportunity to be heard and must be made by written order. Reductions of liability trigger refund obligations, increases trigger prescribed demand notices, and the power is constrained by a prescribed limitation period and a statutory timeline for disposal of applications.
    Act RulesBills
    Reforming Assessment Timelines of assessment, reassessment, and recomputation of income : Clause 286...
    Show AI Summary
    Time limits for tax assessments clarified: tabular framework sets fixed periods, exclusions and minimum residual time for authorities.
    Reform replaces narrative limitation provisions with a tabular, scenario-based regime specifying trigger dates and fixed completion periods-generally one year for routine assessments and reassessments-with special shorter windows for modifications. The draft adds a twelve-month extension for transfer pricing references, an exhaustive list of periods to be excluded from limitation computations (stays, reopenings, treaty exchanges, GAAR references, valuation reports, advance rulings, search handovers, etc.), and safeguards ensuring minimum residual time for authorities, end-of-month extensions, and abatement/revival protections to preserve procedural continuity.
    Act RulesBills
    procedural aspects of assessment, reassessment, and recomputation where income has allegedly escaped...
    Show AI Summary
    Tax rate parity: reassessment must use original-year rates, allowing dropping of proceedings if no extra liability.
    Clause 285 requires tax in assessments, reassessments or recomputations for escaped income to be charged at the rates that would have applied had the income been originally assessed; allows the Assessing Officer to drop reassessment proceedings if the assessee demonstrates that inclusion of the alleged escaped income would not increase tax liability and that the original assessment was not impugned under specified appellate or revision provisions; and bars the assessee from reopening matters concluded by certain specified orders once a claim to drop proceedings is made.
    Act RulesBills
    From Faceless Assessment to Executive Schemes : Clause 532 of the Income Tax Bill, 2025 Vs. Section ...
    Show AI Summary
    Executive power to frame tax administration schemes may reshape processes while raising delegation and legal certainty concerns.
    Clause 532 empowers the Central Government to notify schemes for any purpose under the Act to eliminate taxpayer-authority interface and optimize resources; it authorises modification or suspension of statutory provisions by notification to implement schemes, permits amendment of existing schemes for transitional continuity, and requires notifications be laid before Parliament, thereby enabling broad administrative reconfiguration through subordinate legislation while raising delegation, transparency, and legal certainty concerns.
    Act RulesBills
    Authority and Accountability in Reopening Assessments : Clause 284 of the Income Tax Bill, 2025 Vs. ...
    Show AI Summary
    Sanction authority centralization for reopening assessments shifts approval to Additional/Joint Commissioners, reducing prior higher level oversight.
    Clause 284 appoints Additional Commissioners, Additional Directors, Joint Commissioners, or Joint Directors as the sole authorities to grant sanction for notices under sections 280 and 281, replacing the earlier tiered sanction regime. It removes temporal thresholds and higher level approvals formerly applied to older or complex cases, centralizes decision making, omits explanatory and delegation provisions present in the prior framework, and may therefore streamline administration while raising concerns about reduced oversight, interpretive ambiguity, and possible increased litigation.
    Act RulesBills
    Expanding the Framework for Assessment in Consequence of Appellate Orders : Clause 283 of the Income...
    Show AI Summary
    Giving effect to appellate findings: reassessment notices may issue despite limitation, subject to safeguards preventing reopening time barred years.
    Clause 283 (Income Tax Bill, 2025) and Section 150 (Income tax Act, 1961) permit issuance of assessment, reassessment or recomputation notices to give effect to a finding or direction in appellate, revisional or judicial orders, explicitly including tribunals and Approving Panel directions in the 2025 Bill. Both provisions preserve a limitation safeguard: notices cannot be issued if, when the original order (or reference to the Approving Panel) was made, the relevant year's assessment was already time barred. Notices must show a direct nexus to the operative finding or direction and remain subject to procedural requirements.
    Act RulesBills
    The Changing Landscape of Reassessment Notices in Indian Tax Law : Clause 282 of Income Tax Bill, 20...
    Show AI Summary
    Limitation periods for reassessment notices extended and a minimum cooling-off period introduced, retaining high-value reopening threshold.
    Clause 282 restructures limitation periods for notices under sections 280 and 281 by extending both standard and extended windows for reopening, retaining a high-value threshold that requires the Assessing Officer to possess books, documents or other evidence of substantial escapement, and by introducing a mandatory minimum cooling-off period before any notice may be issued; it does not explicitly replicate earlier exclusions for time spent in show-cause proceedings, court stays, or special provisions for foreign assets, creating potential interpretive gaps.
    Act RulesBills
    The New Framework for Reassessment Notices, Balancing Revenue Powers and Taxpayer Rights : Clause 28...
    Show AI Summary
    Pre-notice hearing requirement: show cause with disclosed information, supervisory approval required before reassessment notices.
    Clause 281 requires that where the AO has information suggesting income has escaped assessment, the AO must serve a show cause notice accompanied by that information, allow the assessee to reply within the period specified, and, after considering the record and any reply, obtain prior approval of the specified authority before passing an order on whether to issue a notice under section 280. The clause omits explicit timelines, does not define the specified authority within the clause, and provides broader exceptions to the pre-notice requirement.
    Act RulesBills
    Modernizing the Reassessment Notice Regime in Indian Income Tax Law : Clause 280 of the Income Tax B...
    Show AI Summary
    Reassessment notice reform: information-driven reopening with prescribed timelines and mandatory higher-level approval to ensure procedural safeguards.
    Clause 280 requires the AO to issue a notice with a copy of the relevant order before reassessment, sets a maximum three-month period to furnish a prescribed, verified return, treats timely returns as equivalent to original returns while disallowing that status for belated filings, mandates that issuance be predicated on "information" suggesting escapement, and requires prior approval of a specified authority where information derives from centralized schemes, Approving Panel directions, or judicial/quasi-judicial orders.
    Act RulesBills
    Procedural and Substantive Shifts in Income Escaping Assessment : Clause 279 of Income Tax Bill, 202...
    Show AI Summary
    Reassessment powers expand to permit assessment of escaped income and collateral issues even where certain procedural steps were missed.
    Clause 279 empowers the Assessing Officer to assess or reassess income and recompute losses, depreciation and other allowances where income escaping assessment is identified, substitutes "tax year" for "assessment year," and, while making AO's powers subject to sections 280-286, permits assessment of other issues that emerge during proceedings even if specified procedural sections were not complied with, thereby prioritising substantive tax determination over technical procedural infirmities.
    Act RulesBills
    Timing of Income Recognition of Compensation and Incentives : Clause 278 of Income Tax Bill, 2025 Vs...
    Show AI Summary
    Timing of income recognition: interest on compensation taxed on receipt; escalation claims taxed on reasonable certainty of realisation.
    Clause 278 deems interest on compensation or enhanced compensation taxable in the tax year of actual receipt, treats escalation claims and export incentives as income when reasonable certainty of realisation is achieved, and taxes specified incomes under section 2(49)(w) on receipt if not earlier charged, thereby aligning taxability with receipt or demonstrable certainty and aiming to prevent timing gaps while leaving factual application issues like allocation and evidentiary standards to further guidance.
    Act RulesBills
    Valuation of Inventory and Securities under Indian Tax Law : Clause 277 of the Income Tax Bill, 2025...
    Show AI Summary
    Inventory valuation rules require ICDS aligned costing, inclusion of statutory levies, and category wise securities valuation for tax computation.
    Inventory and securities for tax purposes must be valued in accordance with ICDS: inventory at the lower of actual cost or net realisable value, purchases, sales and inventory adjusted to include any tax, duty, cess or fee actually paid or incurred to bring goods or services to present location and condition; illiquid or unquoted securities at actual cost and regularly quoted securities at the lower of cost or NRV, with securities compared category wise and special treatment for scheduled banks and public financial institutions subject to prudential guidelines.
    Act RulesBills
    Legal Framework and Practical Impact of Method of Accounting under Indian Income Tax : Clause 276 of...
    Show AI Summary
    Method of accounting: mandatory consistency and binding tax standards lead to AO power to assess by best judgment.
    Clause 276 permits either the cash or mercantile system for computing income provided the system is regularly followed, authorises the Central Government to notify binding Income Computation and Disclosure Standards for classes of assessees or income, and empowers the Assessing Officer to disregard accounts and make a best judgment assessment where accounts are incorrect or incomplete, the accounting method is not regularly followed, or notified ICDS are not applied.
    Act RulesBills
    Comparative Legal Analysis of the DRP Mechanism : Clause 275 of the Income Tax Bill, 2025 Vs. Sectio...
    Show AI Summary
    Dispute Resolution Panel mechanism: statutory draft-order review with binding, reasoned directions and strict timelines for tax variations.
    Clause 275 establishes a DRP mechanism requiring the AO to forward draft assessment orders with prejudicial variations to eligible assessees; assessees have thirty days to accept or object. The DRP, a collegium of three senior officers, may issue written, reasoned directions (confirming, reducing, or enhancing variations) within nine months; such directions are binding on the AO. The clause updates cross-references, vests rule-making power in the Board, and excludes specified proceedings and persons, while omitting an explicit statutory scheme for faceless DRP proceedings.
    Act RulesBills
    Procedures and Legal Safeguards of "impermissible avoidance arrangements" (IAAs) : Clause 274 of the...
    Show AI Summary
    Impermissible avoidance arrangements: GAAR procedure mandates reference, Approving Panel review, and binding directions with safeguards.
    Clause 274 creates a multi-stage GAAR procedure: the Assessing Officer may refer suspected impermissible avoidance arrangements to the Principal Commissioner/Commissioner, who must notify the assessee and allow objections; absent or unsatisfactory responses permit directions or escalation to an independent Approving Panel. The Approving Panel, composed of a High Court judge, a senior revenue officer, and an academic, may summon evidence, hold hearings, and issue binding directions within set timelines; such directions are final under the Act, subject only to constitutional judicial review.
    Act RulesBills
    Future of Faceless Assessment :Clause 273 of the Income Tax Bill, 2025 Vs. Section 144B of the Incom...
    Show AI Summary
    Faceless assessment set as statutory default under proposed bill, expanding electronic non-contact tax assessments and procedural framework.
    Clause 273 makes faceless assessment the statutory default for specified assessments, empowers the Board to define applicability, establishes a National Faceless Assessment Centre with Assessment, Verification, Technical and Review Units, assigns distinct functions to each unit to minimize discretion, mandates electronic communications via the NFAC, and contemplates transfers to the jurisdictional officer where faceless procedure is unsuitable, with procedural details to be prescribed by the Board.

    TMI Notes

    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

      whatsappJoin Channel
      Showing Results for : Reset Filters
      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

      TopicBill (Old Version)Act (2025) - Differences & Practical Impact
      Reference to IFSC in life-insurance entryExclusion 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 sumsIneligibility 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-2023ULIPs: 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 incomeBill 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

      ActsIncome Tax
      Next ➔