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Case Laws GST
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School affiliation services fall outside educational exemption without a direct nexus to admissions or examination conduct.
Consolidated show cause notices may combine financial years governed by Sections 73 and 74 where liabilities are segregated period-wise, each component independently meets limitation and notice requirements, the additional ingredients for fraud-based proceedings are satisfied, and no actual prejudice arises. School affiliation and affiliation-form processing charges are independent taxable supplies where they concern institutional eligibility and compliance, rather than directly and immediately relating to student admission or the conduct of examinations. A broad connection with education does not satisfy the educational-services exemption.
Case Laws GST
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Fraudulent input tax credit requires proof of fictitious supplies, absent goods receipt, and fraud-linked self-assessment, not cancellation alone.
Input tax credit from allegedly non-existent suppliers depends on proof of genuine supply and actual receipt of goods or services, not merely invoices, accounting entries, or banking-channel payments. Section 155 places the burden of establishing ITC eligibility on the claimant. Section 74 requires more than ineligible credit: the wrongful availment must be linked to fraud, wilful misstatement, or suppression to evade tax. Retrospective supplier-registration cancellation is relevant evidence but is not conclusive. A fraud-based notice must disclose facts showing fictitious suppliers, absence of supply, and a basis for inferring the recipient's knowledge or participation.
Case Laws Money Laundering
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Prolonged pre-trial incarceration may justify conditional PMLA bail when delayed trials make continued detention constitutionally disproportionate.
Section 45 of the Prevention of Money-Laundering Act remains the stringent ordinary bail threshold, requiring prosecutorial opportunity and, on opposition, reasonable grounds to believe that the accused is not guilty and unlikely to offend while on bail. Article 21 nevertheless requires a separate, fact-sensitive inquiry where prolonged pre-trial detention and an unrealistic trial timetable make custody disproportionate. Relevant factors include custody length, trial progress, remaining witnesses, secured documentary evidence, source of delay, predicate-case status, and risks of absconding or witness interference. Conditions such as passport surrender, attendance, non-contact directions, and residence disclosure may safeguard the trial.
Case Laws Income Tax
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Prospective operation of stamp-value taxation prevents retrospective application where property agreements and substantial payments predate the charging provision.
Section 56(2)(x)(b) applies to immovable property received for inadequate consideration only where its temporal and valuation conditions are satisfied. A stamp-value difference alone does not establish taxability. Where consideration was fixed and substantial payments or contractual performance occurred before the charging provision commenced, later conveyance or registration does not by itself attract the later charge. Agreement-date valuation is available only for covered transactions where consideration was fixed and paid, wholly or partly, through prescribed banking or electronic modes on or before the agreement date. The tax authority must identify the correct statutory basis and provide a meaningful opportunity to respond.
Case Laws GST
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GST cash seizure limits require statutory relevance and restitutionary interest for unlawfully retained currency following searches.
GST seizure powers cannot be used to take cash as a general investigative measure or security for a possible tax demand. Currency is excluded from goods, and "things" is confined contextually to articles useful or relevant as evidence in GST proceedings. Valid seizure and retention require recorded statutory reasons, procedural compliance and observance of return timelines. Unauthorised retention engages property protections; later return does not cure the deprivation, and accrued interest is restitutionary rather than delayed-refund interest.
Case Laws Income Tax
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Salary expense genuineness requires proof of actual services, business purpose, and fair testing of adverse third-party statements.
Under Section 37(1), salary expenditure is deductible only where it is actually incurred wholly and exclusively for business purposes and is supported by proof of genuine employment, services rendered, business nexus, and payment. Bank transfers and accounting entries alone are not conclusive. Where a third-party statement is central to an allegation of non-genuine salary, the taxpayer should receive disclosure and a meaningful opportunity to rebut it, including cross-examination where appropriate. A retracted and uncorroborated statement is vulnerable as the sole basis for disallowance.
Case Laws Income Tax
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Discounted cash flow valuation remains taxpayer-selected under prescribed rules, while tax scrutiny must identify specific valuation-date defects.
The taxpayer may elect a prescribed DCF valuation for unquoted equity shares, and scrutiny of that method does not permit substitution with Net Asset Value merely because it produces a lower fair market value. The Assessing Officer may examine projections, discount rates, terminal assumptions, computations and source data, but rejection requires demonstrably wrong facts, material errors, a wholly erroneous basis or objectively unsupported assumptions. Subsequent financial performance cannot alone invalidate a bona fide DCF valuation; the relevant inquiry remains the reasonableness of valuation-date information.
Case Laws GST
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Excess IGST on exports remains refundable when later correction triggers automated refund and reconciliation proves duplicate payment.
Refund of excess IGST paid on zero-rated exports may arise where turnover and tax are mistakenly entered under non-zero-rated supplies in FORM GSTR-3B while export invoices and shipping bills are correctly reported in FORM GSTR-1. If the exporter then pays the same IGST in the correct zero-rated field and the automated refund is credited against that later payment, the earlier payment remains a separately identifiable potential excess; its claim is not a repeat request for the same export-tax refund.
Case Laws GST
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GST registration revocation requires timely application, return compliance, payment of dues, and a reasoned statutory decision.
GST registration revocation after cancellation for return default is a conditional, time-bound process. An application under Section 30 and Rule 23 must ordinarily be filed within ninety days, subject to prescribed extension, and cannot be made until pending returns are filed and tax, interest, penalty and late fee are paid. Portal non-acceptance may permit online or physical submission where technically unavailable, but does not condone delay or ensure revocation. The competent authority must assess statutory eligibility, sufficient grounds and compliance while following notice and hearing requirements before rejection.
Case Laws Income Tax
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Reassessment limitation under TOLA requires final notices to issue within surviving time and satisfy statutory safeguards.
Reassessment limitation under TOLA is a jurisdictional restraint. Transitional notices issued between 1 April 2021 and 30 June 2021 are treated as Section 148A(b) show-cause notices, but only the surviving time remaining until 30 June 2021 is available for completing the reassessment process. Periods for supply of material and the assessee's response are excluded, but the Section 148A(d) decision, statutory approval and final Section 148 notice must issue within the remaining period. For Assessment Year 2015-16, post-1 April 2021 notices are treated as time-barred.
Case Laws Customs
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Unseized food consignments cannot face indefinite detention without lawful seizure, valid sampling, and prompt assessment.
Provisional release of an unseized imported food consignment is not mechanically governed by Section 110A, which applies to goods seized under Section 110. Customs may examine, test, verify and reassess imports, but indefinite retention without a seizure memorandum or disclosed reasons connecting the goods with confiscation is not justified. Food sampling should follow the specialised food-safety process through an authorised officer. A valid food-safety report may support conditional clearance, while classification, duty liability, confiscation and adjudication remain open. Revenue may be protected through proportionate security.
Case Laws Customs
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Anti-dumping duty recovery permits post-clearance demands and consequential import IGST where self-assessment omitted an applicable levy.
Unpaid anti-dumping duty omitted during self-assessment may be pursued through the customs recovery procedure without prior appellate modification of the self-assessment. The recovery framework applies to anti-dumping duty through statutory incorporation of provisions concerning assessment, non-levy, short-levy, interest and recovery. Where anti-dumping duty is chargeable, it forms part of the aggregate value used to compute IGST on imports, potentially creating a consequential IGST short-payment. Recovery requires accurate assessment of notification coverage, product, origin, rate, valuation, limitation and procedural safeguards.
Case Laws GST
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Project-wise anti-profiteering requires actual input tax credit measurement and area-based allocation of benefits to real-estate purchasers.
Real-estate anti-profiteering under Section 171 requires project-level identification of additional input tax credit and allocation of the saving across total project area on a per-square-foot basis. Purchase value may quantify credit attributable to project expenditure, but turnover or collections cannot serve as the allocation basis. The comparison must use pre-GST credit actually availed rather than merely available credit. GST collected on consideration inflated by an undistributed benefit forms part of the amount not passed on and remains distinct from statutory interest.
Case Laws Income Tax
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Retirement leave encashment exemption applies under the enhanced notified ceiling while preserving non-government employee classification and statutory conditions.
Section 10(10AA)(ii) governs retirement leave-encashment exemption for non-Government employees, subject to the ten-month earned-leave measure, average-salary computation, and the notified monetary ceiling. Notification No. 31/2023 specifies an enhanced ceiling of Rs. 25,00,000, is deemed effective from 1 April 2023, and certifies that retrospective effect causes no adverse effect. The enhanced ceiling is treated as a remedial rationalisation of an existing exemption and may govern pending earlier-period matters, while preserving the distinction between Government and non-Government employees.
Case Laws GST
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Transit GST jurisdiction limits detention penalties for documented inter-State supplies lacking a local taxable nexus.
Transit-State jurisdiction under GST permits interception, document production, e-way bill verification and authorised physical inspection of goods moving through an intermediate State. It does not, in a pure transit movement, support detention-related penalty for an external inter-State supply where origin and destination lie outside the intercepting State, no tax is payable there, and there is no evidence of diversion, local supply, fictitious or mismatched documents, or mismatch of goods. Cross-empowerment is administrative and does not create an independent territorial taxable nexus.
Case Laws SEBI
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Shareholder ratification cannot cure preferential-issue fund diversion when disclosed objectives are abandoned, triggering securities-market fraud and disclosure concerns.
Post-facto shareholder approval cannot retrospectively validate diversion of preferential-issue proceeds contrary to issue-specific objects disclosed to shareholders and the market. A special resolution authorises the issue but does not permit unrestricted use of proceeds. Periodic deviation reporting, audit-committee review and utilisation disclosures promote transparency; they do not enable diversion followed by later regularisation. Immediate diversion, inadequate commercial justification and missing documentation may indicate that disclosed objects were not genuinely intended to be performed. Later amendment of corporate objects or shareholder ratification cannot cure a completed securities-market disclosure breach.
Case Laws Income Tax
Show AI Summary
Cross-border software payments require copyright-right, technical-service, and permanent-establishment analysis before withholding obligations are determined under applicable treaties.
Section 195 requires withholding only from a remittance to a non-resident that includes income chargeable in India. For software, royalty depends on transfer of copyright rights, not merely the right to install, access, use, or distribute a copyrighted article under restrictive terms. Where a DTAA is more beneficial, its royalty and FTS definitions control; treaty FTS may require technology to be made available. Amounts that are neither royalty nor FTS require consideration as business profits, ordinarily taxable only where profits are attributable to a permanent establishment. Composite payments require component-wise allocation and analysis.
Case Laws GST
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Personal GST penalty requires proof that the beneficiary retained benefit and directed a covered invoice or credit transaction.
Section 122(1A) may impose personal GST penalty on a registered or unregistered person only for a covered invoice or input tax credit transaction. Liability requires cumulative proof that the individual retained an identifiable personal benefit and that the transaction was conducted at that person's instance. Directorship, employment, registration, signature authority, or association with the taxable entity neither independently establishes nor excludes liability. Proceedings require transaction-specific and person-specific allegations and findings. The provision operates prospectively for underlying acts or transactions occurring on or after 01.01.2021.
Case Laws IBC
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Proof of tenancy rights governs insolvency recovery of corporate-debtor premises from occupants lacking enforceable possessory interests.
Where premises form part of the corporate debtor's assets, Sections 18 and 25 of the Insolvency and Bankruptcy Code, 2016 require the resolution professional to take custody, control, preservation and protection measures. An occupant resisting recovery must prove a subsisting tenancy, leasehold interest or enforceable licence through reliable evidence of the parties' intended relationship and its essential terms. Permission to stock goods or conduct limited business activity, prolonged occupation, and business or utility records do not independently create rights in the premises. Section 60(5)(c) supports insolvency jurisdiction over asset-recovery measures connected with the insolvency estate.
Case Laws GST
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GST portal service requires statutory validity and practical accessibility before ex parte adjudication can fairly proceed.
GST portal service is a statutory method under Section 169, but its use in an ex parte demand proceeding depends on effective accessibility and a meaningful opportunity to reply and be heard. Rule 142 requires electronic DRC-01 and DRC-07 summaries to operate alongside the underlying show-cause notice and reasoned order. Portal placement, complete communication, e-mail transmission, technical reliability and proof of actual access may determine whether service is effective, whether waiver applies, and whether appellate limitation begins.

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

17 September, 2025

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SCHEDULE III INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF ELIGIBLE PERSONS

Income-tax Act, 2025

At a Glance

This SCHEDULE III (Income Tax Bill, 2025 - Old Version) lists categories of income that are excluded from the total income of specified eligible persons (see "See section 11"). It matters because it delineates targeted tax exclusions that affect individuals, associations, funds, public bodies and specific sectors (tea, rubber, khadi, securitisation, investor protection funds, strategic petroleum reserves etc.). The Schedule operates by reference to conditions and statutory notes; the effective date or enactment date is Not stated in the document.

Background & Scope

Statutory hooks: The Schedule is linked by reference to section 11 of the Income Tax Bill, 2025. It purports to operate in computing "total income of a tax year" and excludes certain incomes "subject to the conditions mentioned" in column D. Coverage includes personal allowances and pensions, agricultural land compulsory acquisition gains, subsidies for specified commodities, incomes of research associations, professional associations, khadi/village industries institutions, securitisation trusts, various investor protection funds, Core Settlement Guarantee Fund, local authorities, provident funds, international sporting events, bodies established under treaties, and strategic petroleum replenishment arrangements.

Definitions and explanations are provided in the Notes appended to the Table, for selected expressions such as "disaster", "family", "Sikkimese", "concerned Board", "local authority", "Khadi and Village Industries Commission", "securitisation", "commodity exchange", "depository", and "recognised clearing corporation".

Statutory Provision Mode

Text & Scope

The Schedule operates as a table with three columns: (B) income not to be included, (C) eligible persons, and (D) conditions. Key entries include:

  • Exclusion of sums received by HUF members (Sl. No.1), subject to non-overlap with section 99(3) & (4) and payment from family income or estate of family.
  • Partners' share of firm income where the firm is separately assessed (Sl. No.2), provided share is as per profit-sharing ratio in partnership deed.
  • Compensation on account of disaster from governments/local authorities to individuals or heirs, provided no earlier deduction for loss/damage was claimed (Sl. No.3).
  • Partial withdrawals from National Pension System Trust (Sl. No.4), with limits capped at 25% of contributions and subject to PFRDA Act terms.
  • Exemptions for various parliamentary/legislative allowances, travel concessions for leave/retirement, certain perquisites where employer pays tax, rent allowances for residence, and allowances incurred in performance of duties (Sl. Nos.5-13).
  • Exclusions for pensions and family pensions in respect of gallantry awardees and armed forces deaths in operational duties (Sl. Nos.14-16).
  • Exclusion of limited incomes included u/s 99(1)(d) up to Rs.1,500 per minor child (Sl. No.17).
  • Capital gains from compulsory acquisition of agricultural land under specified conditions (Sl. No.18).
  • State/area-based exclusions for Scheduled Tribe members or Sikkimese on incomes from particular areas and for dividends/interest (Sl. Nos.19-20).
  • Sectoral subsidies (tea, rubber, coffee, cardamom etc.) where certified by concerned Boards (Sl. No.21).
  • Exclusion for local authorities' incomes from house property, capital gains, other sources, or business where services/commodities are supplied within jurisdiction (Sl. No.22).
  • Research associations and professional associations/institutions, subject to application of income to objects, specified investments, approvals and withdrawal procedures (Sl. Nos.23-24).
  • Exemptions for institutions supporting khadi/village industries, securitisation trusts, investor protection funds, Core Settlement Guarantee Fund, trade unions, provident funds, international sporting event incomes, treaty bodies, reverse mortgage loan proceeds (Sl. Nos.25-37).

Interpretation

Legislative intent, as deducible from the text, is to continue targeted tax exemptions that promote public policy objectives: support to veterans and gallantry awardees, incentivising specific agricultural/plantation sectors, facilitating market infrastructure (investor protection funds, clearing funds), encouraging khadi/village industries and research/professional bodies, and ensuring certain social and administrative reliefs (disaster compensation, pensions). The Schedule delegates details to "prescribed" rules and notifications in multiple places, indicating legislative reliance on subordinate legislation for operational specifics.

Exceptions/Provisos

Many entries include provisos limiting the scope: caps (e.g., 25% on NPS withdrawal exclusion), territorial/temporal tests (agricultural land used for two years, compensation received on or after 1-4-2004), conditions of approval (research/professional/khadi institutions), notification requirements (Central Government), certificate filing (subsidy under concerned Board), and investment modes for funds (section 350 referenced). Several provisions explicitly state "Nil" or omit further conditions.

Illustrations

  • Employee A receives partial NPS withdrawal of Rs.100,000 after satisfying PFRDA conditions. Exclusion is limited to Rs.25,000 (25% of contributions), subject to PFRDA terms.
  • Firm profits distributed to Partner P as per partnership deed; the partner's share received in his hands is excluded from his total income provided the distribution follows the deed ratio (Sl. No.2).
  • Research Association R, approved u/s 45(3)(a), applies income wholly to its object and invests only in modes specified in section 350; its income is excluded subject to prescribed conditions.

Interplay

The Schedule cross-references multiple statutory instruments and other provisions: Disaster Management Act, PFRDA Act, Companies Act, Securities and Exchange Board rules, Depositories Act, Khadi and Village Industries Commission Act, Provident Funds Act, Securitisation Act, and various regulations. The Schedule repeatedly conditions exclusions on prior approval, notification, prescribed modes of investment, prescribed procedural matters and certificates to be filed with Assessing Officer. These interactions create dependency on subordinate rules and other statutes for full operability.

Differences between SCHEDULE III - Income-tax Act, 2025 (Document 1) and SCHEDULE III - Income Tax Bill, 2025 - Old Version (Document 2) and Practical Impact

  • Reference to National Pension System payment: Document 1 (Act) cites section 124; Document 2 (Bill) cites section 121.

    Practical impact: Potential change in statutory hook for the exemption; taxpayers and administrators must map which provision (section 121 or 124) governs NPS partial withdrawals. If the Bill text (section 121) was renumbered in the enacted Act (section 124), there is a drafting/renumbering discrepancy; this affects locating the governing scheme provision and assessing eligibility.

  • Perquisite/tax-payment clause (Sl. No. 10): Document 2 (Bill) contains an additional clause (c): "such perquisite is paid irrespective of section 200 of the Companies Act, 1956 (1 of 1956)." Document 1 (Act) omits this clause.

    Practical impact: The Bill's additional clause expressly addresses company withholding provisions (s. 200, Companies Act, 1956) suggesting an intention to clarify that employer payment of tax on perquisite is effective even where Companies Act withholding rules might otherwise apply. Its omission in the Act could create uncertainty about interaction with company law withholding obligations and whether employer tax-payment satisfies all compliance facets.

  • Cross-references to section 99 sub-subparagraphs (Sl. No. 1 and Sl. No. 17): Document 1 references section 99(3) and (4) / section 99(1)(c); Document 2 references section 99(3) and (4) / section 99(1)(d) respectively.

    Practical impact: Difference in sub-clause numbering changes the subset of incomes being excluded; this affects which minor-child income or specific inclusions are covered. Practitioners must check the correct numbering in the rest of the statute to determine which incomes are intended to be carved out.

  • Language and formulation differences in multiple clauses (Sl. Nos. 2, 4, 8, 11-13, 18, 21, 23-26, 30, 36, 38, etc.). Examples include "is as per the profit-sharing ratio provided" (Act) vs "The sum received is as per the profit-sharing ratio provided" (Bill) and "as may be prescribed" vs "as prescribed".

    Practical impact: Mostly stylistic; some differences (use of "may be prescribed" versus "prescribed") can carry interpretive weight: "may be prescribed" signals enabling power; "prescribed" can indicate that rules are already framed or that compliance depends on existing prescriptions. If substantive, such wording alters delegation of rulemaking and potential timing of conditions becoming operational.

  • References to subsidiary legislation/regulation dates and instrument identifiers in notes: notable differences include

    • Recognised clearing corporation definitions: Document 1 cites regulations of 2018; Document 2 cites regulations of 2012 (Note 11(a)(i) and (b)(i)).
    • Regulatory cross-references for securitisation and clearing (various notes) differ in punctuation and clause references.
    • Khadi and Village Industries Commission Act citation: Document 1 note shows "61 of 1956" while Document 2 shows "91 of 1956".

    Practical impact: Incorrect or inconsistent cross-references and dates can cause confusion when applying definitions or locating the correct regulatory instrument. A wrong Act number for the Khadi Act or an incorrect year for regulations can lead to mis-identification of the applicable normative instrument, potentially delaying compliance or misapplying exemption conditions until clarified by official corrigenda.

  • Nil / blank condition fields: In a few Sl. Nos., Document 1 expressly records "Nil" under Conditions whereas Document 2 leaves spaces or uses non-breaking spaces ( ).

    Practical impact: Likely no substantive change; formatting differences can, however, create ambiguity in machine-read processing or automated compliance systems until reconciled.

Practical Implications

  • Compliance and risk areas: Taxpayers must ensure strict adherence to conditions (certificates, notifications, territorial and temporal tests) to claim exclusions; failure to furnish certificates or satisfy approval/notification conditions risks denial. Where the Schedule delegates to "prescribed" rules, taxpayers and practitioners must monitor subordinate legislation for operative criteria.
  • Record-keeping/evidence: The Schedule implicitly requires documentary proof - certificates from concerned Boards (Sl. No.21), evidence of domicile/registration (Sikkimese, Scheduled Tribe residence), proof of replenishment for petroleum arrangements, partnership deeds, approval orders for associations, and proof of payment of rent and expenses for allowances. Maintaining contemporaneous records, approval letters and notifications will be crucial.

Key Takeaways

  • Schedule III enumerates targeted exclusions from "total income" tied to discrete policy objectives and beneficiary classes.
  • Most exclusions are conditional and require compliance with prescribed procedures, certificates, approvals or notifications; subordinate legislation plays a central role.
  • Sectoral exclusions (tea, rubber, coffee, khadi, investor protection funds, securitisation trusts) continue to be recognised but hinge on certification/notification.
  • Personal reliefs (NPS partial withdrawal, travel concessions, rent allowances, pensions to gallantry awardees) are retained but subject to quantifiable limits and conditions.
  • Cross-references to other statutes and regulations are numerous; accurate application requires concurrent review of those instruments.
  • Drafting and reference inconsistencies (e.g., section and regulation numbers) in the Bill text require attention to avoid misapplication; practitioners should verify authoritative enacted text and any corrigenda.
  • Documentation and approval evidence will be central to successfully claiming exclusions and to withstand assessment scrutiny.

Full Text:

SCHEDULE III INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF ELIGIBLE PERSONS

Topics

Acts Income Tax