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
    Role of the Transfer Pricing Officer in Ensuring Arm’s Length Compliance : Clause 166 of the Incom...
    Act RulesBills
    Reframing Arm's Length Pricing in India's Evolving Transfer Pricing Regime : Clause 165 of the Incom...
    Act RulesBills
    Meaning of Specified Domestic Transactions under Clause 164 of Income Tax Bill, 2025 Vs. Section 92B...
    Act RulesBills
    Meaning of International Transaction : Clause 163 of the Income Tax Bill, 2025 Vs. Section 92B of th...
    Case LawsIncome Tax
    Remuneration and interest received by an individual partner from a partnership firm can be subjected...
    Act RulesBills
    Meaning of Associates Enterprise under Clause 162 of the Income Tax Bill, 2025 Vs. Section 92A of th...
    Act RulesBills
    Computation of income arising from international transactions and specified domestic transactions : ...
    Act RulesBills
    Future of Unilateral Agreement relief in India : Clause 160 of the Income Tax Bill, 2025 Vs. Section...
    Act RulesBills
    Streamlining Double Taxation Relief and International Tax Agreements : Clause 159 of Income Tax Bill...
    Act RulesBills
    Comprehensive Reform in International Taxation and Treaty Implementation : Clause 159 of Income Tax ...
    Act RulesBills
    Addressing Cross-Border Taxation of Foreign Retirement Benefits : Clause 158 of Income Tax Bill, 202...
    Act RulesBills
    Continuity and Reform in Tax Relief for Irregular Income : Clause 157 of the Income Tax Bill, 2025 V...
    Case LawsGST
    Constitutional Limits on GST: Principle of mutuality insulates transactions between clubs/associatio...
    Act RulesBills
    Relief to resident individual taxpayers with lower and middle incomes by reducing their effective ta...
    Act RulesBills
    The Structure and Implications of Income Tax Rebates : Clause 155 of the Income Tax Bill, 2025 Vs. S...
    Act RulesBills
    Analyzing the Tax Treatment of Collective Entities under Clause 310 of Income Tax Bill, 2025 Vs. Sec...
    Act RulesBills
    Tax Deductions for Persons with Disabilities : Clause 154 of the Income Tax Bill, 2025 vs. Section 8...
    Act RulesBills
    Statutory deduction for interest income derived from deposits : Clause 153 of the Income Tax Bill, 2...
    Act RulesBills
    Patent Royalty Deduction Scheme to Boost Innovation and R&D in India : Clause 152 of the Income Tax ...
    Act RulesBills
    Incentivize and support authors by providing a tax deduction on royalty and copyright income : Claus...
❮
❯
❯❯
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
    Role of the Transfer Pricing Officer in Ensuring Arm’s Length Compliance : Clause 166 of the Incom...
    Show AI Summary
    Arm's length pricing: multi year ALP option expands certainty and permits roll forward of transfer pricing determinations.
    Clause 166 authorises the Assessing Officer to refer international and specified domestic related party transactions to a Transfer Pricing Officer for determination of the arm's length price, subject to prior approval; mandates notice, hearing, prescribed transfer pricing methods, and communication of the TPO order to AO and assessee; empowers the TPO to examine unreported transactions and to validate a taxpayer's option to apply a determined ALP to similar subsequent years, with rectification powers and corresponding AO amendment obligations, and permits issuance of Board guidelines to implement the multi year regime.
    Act RulesBills
    Reframing Arm's Length Pricing in India's Evolving Transfer Pricing Regime : Clause 165 of the Incom...
    Show AI Summary
    Arm's length price determination: new clause refines methods and AO powers, emphasizing documentation and prescribed procedures.
    Determination of Arm's Length Price requires selecting the most appropriate method from prescribed alternatives based on the transaction's nature, associated enterprise class, and functional analysis; where a single comparable price is found it is the arm's length price subject to a prescribed tolerance, while multiple prices must be reconciled in a prescribed manner. The tax authority may determine ALP during assessment if methods were not followed or documentation is inadequate, but must issue a show cause notice before adjustment; adjustments permit recomputation of total income and restrict deductions on enhanced income, with safeguards to prevent double adjustment.
    Act RulesBills
    Meaning of Specified Domestic Transactions under Clause 164 of Income Tax Bill, 2025 Vs. Section 92B...
    Show AI Summary
    Specified domestic transaction: extending transfer pricing to high-value related-party domestic dealings, subject to arm's length compliance.
    Clause 164 defines specified domestic transaction by enumerating categories of non-international related-party dealings brought under transfer pricing when aggregate annual value exceeds a high-value threshold, includes a residual prescription power to notify additional transactions, and requires contemporaneous documentation and benchmarking to ensure compliance with the arm's length principle.
    Act RulesBills
    Meaning of International Transaction : Clause 163 of the Income Tax Bill, 2025 Vs. Section 92B of th...
    Show AI Summary
    International transaction scope expanded broadens transfer pricing coverage to intangibles and indirect dealings, including restructuring and financing arrangements.
    Clause 163 defines international transaction expansively to include tangible and intangible property (expressly including transfer), capital financing, services, business restructuring, cost sharing and any transaction affecting profits, income, losses or assets; it reproduces an illustrative list of intangibles and contains a deeming rule treating dealings with third parties as international transactions where terms are determined with or pursuant to an associated enterprise, thereby widening transfer pricing coverage and anti avoidance reach.
    Case LawsIncome Tax
    Remuneration and interest received by an individual partner from a partnership firm can be subjected...
    Show AI Summary
    Presumptive taxation: partner remuneration and interest cannot be treated as individual business turnover for presumptive tax purposes.
    Section 44AD applies only where the assessee carries on an eligible business and has actual turnover or gross receipts attributable to that assessee. Remuneration and interest paid by a partnership firm to a partner arise from the firm's accounts and partnership agreement; although Section 28(v) taxes such receipts in the hands of the partner, that deeming does not convert them into the partner's turnover or gross receipts for Section 44AD. Section 40(b) governs firm deductibility but does not create an independent business activity in the partner; hence such receipts cannot be subjected to Section 44AD presumptive taxation.
    Act RulesBills
    Meaning of Associates Enterprise under Clause 162 of the Income Tax Bill, 2025 Vs. Section 92A of th...
    Show AI Summary
    Associated enterprise definition expands transfer pricing scope to include specified domestic transactions and indirect control.
    Clause 162 defines associated enterprise through a general limb covering direct or indirect participation in management, control or capital and a list of deeming provisions-equity thresholds, significant loans and guarantees, board control, dependence on intangibles, supply and sales dependence, and familial/HUF control-while expressly extending the concept to specified domestic transactions and retaining prescribed catch-all and subjective influence tests that may require further guidance.
    Act RulesBills
    Computation of income arising from international transactions and specified domestic transactions : ...
    Show AI Summary
    Arm's length price requirement drives transfer pricing adjustments to prevent profit shifting and protect the tax base.
    Clause 161 mandates computation of income and the allowance of expenses or interest for international and specified domestic transactions among associated enterprises with reference to the arm's length price, requires arm's length allocation for shared costs or services, and prohibits transfer pricing adjustments that would reduce taxable income or increase losses, thereby strengthening scrutiny of intra group cost allocations and deductions to prevent profit shifting.
    Act RulesBills
    Future of Unilateral Agreement relief in India : Clause 160 of the Income Tax Bill, 2025 Vs. Section...
    Show AI Summary
    Unilateral double taxation relief limits credit to the lower of domestic or foreign tax rates and requires proof of foreign tax payment.
    Clause 160 provides unilateral relief for Indian residents and non-resident partners taxed on foreign income where no DTAA exists, limited to the lower of the Indian tax rate or the foreign tax rate, requires proof of foreign tax payment, and defines key terms to include excess profits or business profits taxes; it modernizes terminology and omits a prior country-specific carve-out, while raising evidentiary and computational ambiguities.
    Act RulesBills
    Streamlining Double Taxation Relief and International Tax Agreements : Clause 159 of Income Tax Bill...
    Show AI Summary
    Double taxation relief framework modernised: new clause clarifies treaty adoption, anti abuse safeguards, and documentation requirements.
    Clause 159 empowers the Central Government to enter into and adopt agreements with foreign countries and notified specified territories, and permits specified domestic associations to enter into sectoral agreements subject to governmental adoption and notification. Agreements may provide relief from double taxation, avoidance of double taxation constrained by anti abuse safeguards, exchange of information to prevent evasion, and mutual assistance in tax recovery. The Act's provisions apply to the extent more beneficial to the taxpayer, but anti abuse measures in Chapter XI apply notwithstanding such benefit. Non residents must furnish a certificate of residence and prescribed documentation to claim treaty relief.
    Act RulesBills
    Comprehensive Reform in International Taxation and Treaty Implementation : Clause 159 of Income Tax ...
    Show AI Summary
    Treaty interpretation and anti-abuse primacy clarified: government may adopt association agreements while preserving treaty benefit limits.
    Clause 159 authorises the Central Government to enter into agreements with foreign countries or notified territories and to adopt agreements between notified specified associations for double taxation relief, exchange of information, and mutual assistance in recovery. Taxpayers may claim the more beneficial of domestic law or a notified agreement, subject to documentary requirements for non-residents and the primacy of chapter-level anti-abuse provisions. A four-tier interpretive hierarchy for treaty terms is provided, with retrospective effect from the agreement's commencement.
    Act RulesBills
    Addressing Cross-Border Taxation of Foreign Retirement Benefits : Clause 158 of Income Tax Bill, 202...
    Show AI Summary
    Relief from taxation on foreign retirement accounts aligns Indian tax timing with foreign withdrawal taxation to prevent double taxation.
    Clause 158 aligns Indian taxation of income from foreign retirement accounts with the foreign tax event by restricting relief to specified accounts in notified countries opened while the taxpayer was non resident, and by delegating timing and procedural details to rules to prevent double taxation, address timing mismatches, and guard against abuse.
    Act RulesBills
    Continuity and Reform in Tax Relief for Irregular Income : Clause 157 of the Income Tax Bill, 2025 V...
    Show AI Summary
    Relief for irregular salary receipts: claim based allocation to prior years with computation and procedures delegated to rules.
    Clause 157 provides relief where lump sum receipts (arrear or advance salary, salary for over twelve months, profits in lieu of salary, and arrears of family pension) cause an assessment at a higher rate. Relief is claim based on application to the Assessing Officer and requires allocation of amounts to earlier years; the Assessing Officer grants relief as prescribed in rules. An anti abuse exclusion denies relief where a deduction for the same amount has already been claimed, and computation, procedural steps and particulars (e.g., Form 10E practice) are to be specified by rules.
    Case LawsGST
    Constitutional Limits on GST: Principle of mutuality insulates transactions between clubs/associatio...
    Show AI Summary
    Mutuality doctrine shields club-member transactions from GST; statutory deeming fiction held unconstitutional, retrospective levy invalid.
    The Kerala High Court held that the doctrine of mutuality insulates transactions between an association and its members from GST because the concepts of "supply" and "service" require distinct persons; statutory deeming provisions treating associations and members as separate persons are ultra vires Article 246A and related constitutional provisions, and retrospective application of those amendments is invalid as unfair and contrary to the rule of law.
    Act RulesBills
    Relief to resident individual taxpayers with lower and middle incomes by reducing their effective ta...
    Show AI Summary
    Rebate for resident individuals: expanded two-tier relief and tapered withdrawal to avoid abrupt tax cliffs.
    Clause 156 creates a two-tier rebate: a general rebate for resident individuals below a base threshold and an enhanced rebate for taxpayers opting into the new tax regime with a higher threshold and larger maximum rebate. The enhanced rebate includes a tapering mechanism for incomes above its threshold and an express cap preventing the rebate from exceeding actual tax liability, with computation rules tied to the new-regime tax rates.
    Act RulesBills
    The Structure and Implications of Income Tax Rebates : Clause 155 of the Income Tax Bill, 2025 Vs. S...
    Show AI Summary
    Rebate allowance framework modernisation - rebates applied after tax computation and capped to prevent negative tax liability.
    Allowance of rebates is enabled by Clause 155, which permits rebates to be deducted from income-tax computed on total income after tax computation and before other chapter deductions, and caps aggregate rebates so they cannot exceed the tax computed prior to rebates; the substantive conditions and limits are delegated to Section 156.
    Act RulesBills
    Analyzing the Tax Treatment of Collective Entities under Clause 310 of Income Tax Bill, 2025 Vs. Sec...
    Show AI Summary
    Taxation of member's share: entity-level tax exempts members, unless the entity is untaxed or taxed below top rate.
    Clause 310 establishes that a member's share of income from an AOP/BOI is exempt from tax in the member's hands when the association/body is taxed on that income; if the AOP/BOI is not chargeable to tax the member's share is taxed in the member's hands; and if the AOP/BOI is taxed at the maximum marginal rate the member's share is excluded from his total income, otherwise the member's share is included in his total income.
    Act RulesBills
    Tax Deductions for Persons with Disabilities : Clause 154 of the Income Tax Bill, 2025 vs. Section 8...
    Show AI Summary
    Deduction for disability: standardized tax relief retained with mandatory medical certification and prescribed certificate submission.
    Clause 154 allows resident individuals certified by a medical authority as persons with disability or severe disability to claim a fixed deduction, contingent on furnishing the prescribed certificate with the return and on certificate validity and reassessment rules; definitions are cross referenced to a Bill provision for consistency.
    Act RulesBills
    Statutory deduction for interest income derived from deposits : Clause 153 of the Income Tax Bill, 2...
    Show AI Summary
    Deduction for interest on deposits expanded to include senior citizens and time deposits, consolidating small-saver relief.
    Clause 153 provides a statutory deduction for interest on deposits to individuals, senior citizens, and HUFs, specifying eligible institutions (banks, cooperative banking societies, and post offices), preserving denial of deductions for interest held by or on behalf of firms, AOPs, or BOIs, and defining time deposits. It consolidates prior disparate provisions by including senior citizens within the same clause with expanded coverage for time deposits, while maintaining the existing deduction treatment for non senior individuals and HUFs.
    Act RulesBills
    Patent Royalty Deduction Scheme to Boost Innovation and R&D in India : Clause 152 of the Income Tax ...
    Show AI Summary
    Patent royalty deduction for resident inventors: capped, certified relief tied to repatriated foreign receipts and compulsory licence limits.
    Clause 152 provides a statutory deduction for resident individual patentees in respect of royalty from patents registered on or after 1 April 2003, subject to a statutory annual ceiling and procedural certification. Deductions in compulsory licence cases are limited to Controller determined royalty; foreign-sourced receipts qualify only to the extent repatriated in convertible foreign exchange within the prescribed period and supported by prescribed certification. Definitions exclude capital gains and sales proceeds from the scope of "royalty," and certification by prescribed authorities is required with the return.
    Act RulesBills
    Incentivize and support authors by providing a tax deduction on royalty and copyright income : Claus...
    Show AI Summary
    Deduction for authors' royalty income limited by a fixed cap and repatriation plus certification requirements.
    Clause 151 grants a deduction to resident individual authors for professional income from copyright assignment or royalties for literary, artistic, or scientific books (excluding textbooks), subject to a fixed monetary cap and a royalty to sales limit for non lump sum receipts. Foreign income qualifies only if repatriated in convertible exchange within a prescribed period and accompanied by prescribed certification, and claimants must submit payer verified certificates with returns; double deduction for the same income is expressly prohibited.

    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 ➔