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.

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.

Supervisory power of Joint Commissioner permits binding directions in pending assessments, with a hearing before any prejudicial direction.
Clause 272 empowers the Joint Commissioner to intervene in any pending assessment by suo motu action, AO reference, or assessee application, to call for records and issue directions that are binding on the Assessing Officer where deemed necessary or expedient; no direction prejudicial to the assessee may be issued without an opportunity of being heard, while directions prescribing lines of investigation are not treated as prejudicial.

Best judgment assessment: requirement of notice and opportunity to be heard before AO determines taxpayer's liability under reformed assessment framework.
Clause 271 creates a mechanism for best judgment assessment where the AO may assess income or loss when an assessee defaults on filing returns or complying with statutory notices; the AO must consider all relevant materials, issue a show cause notice affording an opportunity of being heard (subject to an exception where an earlier notice suffices), and determine the sum payable based on his best judgment, with certain interpretative ambiguities left for administrative or judicial clarification.

Assessment procedure modernization strengthens mandatory intimation and centralized processing, enhancing taxpayer engagement and procedural certainty.
Clause 270 modernises return assessment by allowing specified prima facie adjustments (arithmetical errors, incorrect claims apparent from the return, late loss set-off, audit discrepancies, late deductions) only after mandatory written or electronic intimation and consideration of the assessee's response; acknowledges deemed intimation where no adjustment arises; fixes an outer deadline for intimation; permits authorised officers to select cases for scrutiny within a prescribed period and requires written assessment orders after evidence is considered; and provides safeguards for exempt entities and non-profits while enabling centralised, technology-driven processing schemes.

Faceless tax administration: broad power to frame schemes and modify statutory application for digitalised tax processes.
Clause 532 authorises the Central Government to make schemes by notification for any purpose under the Income Tax Bill, 2025, aiming to enhance efficiency, transparency, and accountability by reducing taxpayer-official interface and optimising resource utilisation. For implementation, the Government may issue notifications that disapply or modify provisions of the Act, and may amend schemes previously framed under the 1961 Act; every such notification must be laid before each House of Parliament. The Board may be empowered to make schemes subject to control of the Central Government.

Valuation references: statutory regime for Valuation Officer reports, with procedural safeguards and enforceable reporting timelines.
Clause 269 empowers the Assessing Officer to refer estimation of value of any asset, property, or investment to a Valuation Officer, who must consider all evidence, provide an opportunity to be heard, inspect premises with prescribed notice, and submit a valuation report to the AO and assessee; the VO may make a best judgment assessment if the assessee fails to cooperate and may rectify mistakes apparent from the record, while the AO may use the report after affording the assessee a hearing.

Inquiry before assessment: AO empowered to call for documents and order special audits, with senior approval and procedural safeguards.
Clause 268 creates a structured regime for Inquiry before assessment granting the Assessing Officer power to call for returns, accounts, documents and statements of assets and liabilities, subject to prior senior approval for intrusive disclosures and temporal limits on record production. It authorises special audits and inventory valuations with nominated professionals, mandates standardised forms and verifications, provides time limits for reports with limited extensions, secures the assessee's right to be heard before use of inquiry material in assessment, and shifts audit/valuation expenses to the Central Government under prescribed guidelines.

Updated return taxation requires prior payment of tax, interest, fees and graded additional tax before filing an updated return.
Clause 267 requires prior payment of tax, interest, fee and a graded additional income-tax before filing an updated return, prescribes allowable credits and reliefs to determine net liability (including advance tax, TDS/TCS, foreign tax reliefs and specified tax credits), treats refunds and earlier credits to prevent double benefit, mandates proof of payment with the updated return, clarifies interest computation on assessed tax under the new code, and empowers the administration to issue implementation guidelines subject to a time-limited sunset and parliamentary oversight.

Self-assessment obligation: pay tax, interest and fees before filing return, with proof, or face default consequences.
Clause 266 requires payment, before filing the return, of any tax payable together with interest and fee and proof of such payment; payments short are appropriated in the order fee, then interest, then tax; interest is computed after reducing advance tax, TDS/TCS and specified reliefs and credits; ''assessed tax'' is defined as tax on returned income reduced by those credits and reliefs; failure to pay renders the assessee an assessee in default and triggers recovery and penal consequences without prejudice to other liabilities.

Verification of returns: clarified authorised signatories and integration of insolvency professionals, with some procedural ambiguities remaining.
Clause 265 modernises verification of returns by enumerating, in tabular form, the persons authorised to verify returns for specified taxpayer categories, preserving traditional authorities (individual, Karta, managing/designated partner, principal officer, CEO) while incorporating insolvency professionals for entities under insolvency. The Bill omits an explicit "absence from India" reference for individuals and does not expressly require attachment of powers of attorney for non-resident companies, raising potential evidentiary and interpretive issues. The provision allows designation of "other persons as prescribed," aligning the statute with Rule 12AA but requiring careful subordinate rule-making.

Electronic filing rules broaden CBDT authority to require verification, disclosures, and secure transmission for tax returns.
Clause 263(2)(a) expands CBDT rule-making authority over procedural return-filing aspects by authorising prescription of classes of persons, the form and manner of furnishing returns, methods of verification, supporting documentation requirements (including post-filing production), and the technological resources or electronic records for transmission, thereby enabling broader disclosures, digital authentication, and integration with other databases to support data-driven compliance.

Return filing modernization enables rulemaking for electronic forms, verification, and document on demand in a risk based regime.
Clause 263(2)(a) empowers the Board to prescribe the form, manner, verification and electronic transmission of returns, to specify which supporting documents need not accompany the return but must be produced on demand, and to require prescribed particulars in returns (such as exempt income, specified assets, bank and card details, high value expenditures, audit reports and business or partner details), thereby enabling a risk based, post filing verification regime and differentiated electronic filing requirements for classes of taxpayers.

Tax Return Preparer scheme shifts operational detail to subordinate legislation, increasing administrative discretion and need for oversight.
Clause 264 empowers the Central Board of Direct Taxes to notify a Tax Return Preparer scheme allowing specified non corporate, non audited persons to have returns prepared and furnished through authorised TRPs. The clause retains exclusions for audit required entities and certain disqualified persons, mandates scheme notification as per the statutory procedure, and delegates operational details-qualifications, authorisation period, code of conduct, duties, withdrawal and disciplinary mechanisms-to subordinate legislation, increasing administrative flexibility while placing emphasis on oversight, transparency, and transitional arrangements.

PAN-Aadhaar authentication strengthens transaction traceability and imposes reciprocal verification duties on parties.
Clause 262(9) requires every person entering into prescribed transactions to quote and authenticate their PAN or Aadhaar and obliges recipients of transaction documents to ensure such quoting and authentication, with authentication involving verification against demographic or biometric information through prescribed authorities and modalities to be specified by the CBDT.

Permanent Account Number and Aadhaar integration expands mandatory identification and digital authentication for specified transactions and filings.
Clause 262 consolidates allotment, quoting and authentication of the Permanent Account Number and integrates PAN with Aadhaar by mandating application and quoting obligations for specified classes, enabling voluntary applications, requiring intimation of changes, prohibiting multiple PANs, and empowering rule-making and notification to prescribe transactions, authentication procedures and exemptions; it permits Aadhaar linkage and use in lieu of PAN, contemplates inoperative PAN for non-intimation, and relies on Rules 114AAB, 114B, 114BA and 114BB for operational detail while triggering penalties under the existing framework modeled on Section 272B.

Mandatory Return Filing expands scope and tightens timelines while enabling updated returns with safeguards.
Clause 263 consolidates and expands return-filing obligations by listing classes of mandatory filers, requiring threshold income computation without regard to specified exemptions, defining key terms such as beneficial owner and specified entity, prescribing differentiated due dates, authorising rule-making for electronic filing and return particulars, providing a nine-month window for belated and revised returns, maintaining a forty-eight-month updated return regime subject to specified exclusions, and setting a procedure for defective returns with a rectification period and potential invalidation if unrectified.

Controlled disclosure of taxpayer information limited by a public interest test, with executive power to restrict access and final administrative decisions.
Clause 258 authorises income tax authorities to disclose information obtained in the discharge of their functions to other tax, duty, cess, or foreign exchange authorities and to notified bodies, constrained by necessity and a public interest limitation; it allows private parties to apply for information subject to satisfaction of senior tax officials and renders disclosure decisions final and non justiciable, while empowering the Central Government by notification to restrict furnishing of information for specified classes of assessees or authorities.

Deemed judicial status for tax proceedings brings perjury and court grade procedural safeguards to tax adjudication processes.
Clause 257 treats proceedings before income tax authorities as judicial proceedings and deems those authorities to be Civil Courts for specified sections of the Bharatiya Nyaya Sanhita, 2023 and the Bharatiya Nagarik Suraksha Sanhita, 2023, thereby subjecting participants to penal provisions for false evidence, insult to authority, and related offences while preserving a complaint based procedural safeguard for initiating prosecutions through the income tax authority.

Faceless collection of information: executive empowered to implement digital, non interface tax information schemes with parliamentary oversight.
Clause 260 empowers the Central Government, by notification, to create a faceless collection of information scheme for calling for and collecting tax information, inspecting company registers, and exercising assessing powers, enabling elimination of physical interfaces, centralised resource optimisation, team based dynamic jurisdiction, and exceptions or modifications to other statutory provisions to implement the scheme, with the requirement that notifications be laid before both Houses of Parliament.