Taxation of oral trusts: income charged at the maximum marginal rate regardless of other provisions, deterring informal trusts.
Income from oral trusts is taxed at the maximum marginal rate under both Section 164A and Clause 308, with a non-obstante clause to override other provisions; Clause 308 modernises the framework by referring to the person appointed under an oral trust and centralising the definition, thereby broadening potential liability and simplifying enforcement while raising disclosure and evidentiary burdens on assessees.

Taxation of indeterminate-beneficiary trusts: highest marginal rate applies unless narrow bona fide exceptions permit AOP rate.
Clause 307 taxes income of representative assessees at the maximum marginal rate where beneficiaries or their shares are not expressly identifiable in the trust instrument or court order, with deeming provisions treating ambiguity as indeterminacy. Exceptions permit taxation at the AOP rate for beneficiaries below exemption limits and not under other trusts, sole will-declared trusts, bona fide pre-1970 family trusts for dependents, and bona fide employee benefit funds. Business profits are generally taxed at the maximum rate, except for sole testamentary trusts for dependent relatives which may get AOP treatment.

Agent of non resident: expanded definition enables tax assessment and recovery from connected persons and intermediaries.
The clause defines who may be regarded as an agent of a non resident for tax purposes, listing persons employed by or acting for the non resident, those having any business connection with the non resident, persons from or through whom the non resident receives income, trustees, and any person acquiring a capital asset in India by transfer; it excludes certain brokers and requires an opportunity of being heard before treating any person as an agent.

Representative assessee rights to recover or retain tax protect intermediaries and permit certified withholding pending final liability.
Clause 305 grants a representative assessee a statutory right to recover from the principal any sum paid under the Act or to retain an equivalent amount from monies in his possession; allows withholding of an estimated liability prior to assessment; authorizes obtaining an Assessing Officer's certificate to fix the amount eligible for retention pending settlement; and limits recoverable liability to the certificate amount except insofar as the representative then holds additional assets of the principal.

Representative assessee liability clarified: apportionment formula and direct beneficiary assessment enhance tax recovery powers.
Representative assessees are treated as if represented income were received beneficially by them, making them liable to assessment and recovery in their name in a representative capacity; a bar on double assessment applies. The Assessing Officer may directly assess or recover tax from the beneficiary, and may use the same remedies against property under the representative's control as against property of any taxpayer. For partly chargeable trust income the Clause prescribes a formula to apportion each beneficiary's taxable share, while omitting the prior maximum marginal rate rule for trustees' business income.

Representative assessee provisions modernized: agents, guardians and trustees held liable for tax compliance and assessment.
Clause 303 designates specified persons as representative assessees-agents of non-residents, guardians/managers for minors and persons of unsound mind, court-appointed managers and trustees of written and oral trusts-and deems each representative to be an assessee for all purposes, including filing returns, payment of tax, and submission to assessment and appeal proceedings; it also provides a deeming mechanism allowing informal trusts to be treated as written trusts when a written statement is submitted to the Assessing Officer within prescribed timelines.

Continuity of tax liability: legal representatives remain liable for deceased's tax obligations, limited to the estate, with exceptions.
Clause 302 establishes that the legal representative is liable for any sum the deceased would have owed, is deemed to be an assessee, and that pending or potential assessments may be continued or initiated against the legal representative; liability is ordinarily limited to the estate's capacity but personal liability arises where the representative alienates or charges estate assets while liabilities remain, capped at the value of the asset so alienated.

Saving clause preserves general tax provisions in search assessments unless the special chapter expressly overrides them.
Clause 300 and Section 158BH operate as a saving clause preserving applicability of all general provisions of the Act to assessments under the special search chapter, except where the special chapter expressly provides otherwise; this ensures procedural, substantive and remedial provisions (notice, appeals, penalties, recovery, limitation rules) continue to apply unless specifically overridden, while raising interpretive issues about the extent of overriding effect, classification of provisions as procedural or substantive, and transitional application under the new Bill.

Authority for block assessments: senior officer decision plus prior supervisory approval required to validate search based assessments.
Orders assessing undisclosed income in search cases must be passed by an Assessing Officer at or above specified senior ranks and only with the previous approval of a higher authority; Clause 299 of the Income Tax Bill, 2025 carries forward this core framework from Section 158BG while aligning applicability to the commencement of the new Act. The requirement that approvals reflect a genuine application of mind, clear documentation of the approval process, and management of transitional cases are central operative obligations.

Interest and penalty in search assessments: revised rules mandate monthly interest and a fixed half tax penalty with a compliance safe harbor.
Clause 298 retains the Section 158BFA framework by charging simple interest on tax determined on undisclosed income for delay or non-filing after a search notice and imposing a fixed penalty equal to fifty percent of tax on undisclosed income, while providing a safe harbor where return is filed, tax paid with evidence and no appeal is filed; procedural safeguards include a right to be heard, supervisory approval for larger penalties, exclusion of rehearing and court stay periods from limitation, and mandatory communication of penalty orders to the Assessing Officer.

Relief from interest and penalty: block-period undisclosed income in search assessments taxed without additional interest or penalty.
Clause 297 exempts assessees from interest and penalty for undisclosed income assessed or reassessed for the block period in search and seizure proceedings, limiting relief to block-period income and applying to both initial block assessments and reassessments while leaving regular assessments and other penalties unaffected.

Time limitation for block assessments ensures fixed completion period with specified exclusions and reference extensions.
Clause 296 mandates that block assessment orders be completed within twelve months from the end of the month in which the last search or requisition authorisation was executed, extends that period by twelve months where a statutory reference is made, excludes up to 180 days for transfer of seized material to the jurisdictional Assessing Officer, provides a minimum residual period of sixty days after exclusions, and suspends the limitation clock for a specified list of circumstances such as court stays, international information exchange (capped), audits and valuation references, and advance ruling proceedings.

Assessment of third-party undisclosed income enables transfer of seized material to jurisdictional AO for special assessment procedure.
Clause 295 mandates that where an AO is satisfied undisclosed income discovered in a search pertains to a person other than the one searched, all seized assets, documents and information must be handed over to the AO having jurisdiction over that third person, who will assess the third party under the Bill's special assessment procedure, with the relevant chapter's provisions applying mutatis mutandis, and explicitly includes virtual digital assets and electronic records within scope.

Block assessment procedure tightens timelines and mandates electronic filing, broadening assessment to total income including undisclosed income
The clause establishes a restructured block assessment procedure triggered by search or requisition, requiring the Assessing Officer to issue a notice for a return in a prescribed form and manner with mandatory electronic filing for specified categories. Returns must be filed within a capped period, revised returns are barred, and furnished returns carry deeming consequences; prior supervisory approval is required before issuing the notice. The AO must determine tax on the basis of the block period, applying renumbered computation, penalty and procedural provisions "so far as may be," and may verify tax credits claimed against assessed undisclosed income.

Block period income computation clarifies aggregation, exclusions and evidentiary basis for assessing undisclosed income in search cases.
Clause 293 prescribes a structured, evidence based aggregation of block period income, listing components such as voluntary disclosures, income previously assessed, income declared in response to notices, income determined from books and documents, and any additional undisclosed income identified by the Assessing Officer on available evidence. It excludes international and specified domestic transactions from block assessment, applies special rules for firms, disallows set off of prior losses and unabsorbed depreciation against undisclosed income, and permits carry forward of such losses for subsequent years.

Search assessment regime establishes exclusive procedure for block-period income, abatement and revival rules, and separate regular-income treatment.
Clause 292 creates an exclusive special procedure for block-period assessments triggered by search or requisition, mandating automatic abatement of all pending assessments and related references or orders for relevant tax years, requiring completion of earlier search assessments before subsequent ones (with minimum extensions where needed), prescribing separate treatment of regular income for the year of the last search, providing revival of abated proceedings if the special assessment is annulled, and standardising taxation of block-period income by cross-reference to the Bill's charging provision.

Block period definition modernisation clarifies timeframe and triggers for assessing undisclosed income in search and requisition cases.
Clause 301 provides an interpretative framework for special search assessments by defining the block period as a multi year look back plus the portion of the year of search or requisition, modernising terminology to "tax year", clarifying that the conclusion of search (as per the last panchnama) determines execution irrespective of seizure, defining requisitioned and seized items, and expressly including virtual digital assets and incorrect claims of deductions within the definition of undisclosed income.

Identical question of law deferral: appeals stayed pending final decision in lead cases, subject to collegium and taxpayer acceptance.
Clause 376 provides for deferral of revenue appeals where an identical question of law is pending before a High Court or the Supreme Court. A collegium of senior Commissioners may direct non-filing of appeals where the precedent case favours the assessee; the Principal Commissioner/Commissioner must instruct the Assessing Officer to file a prescribed-form application within set timelines. Deferral requires the assessee's acceptance of identity; absent such acceptance ordinary appellate procedures apply. If the final decision in the lead case is adverse to the revenue, appeals may be filed within specified periods.

Avoidance of repetitive appeals: a declaration procedure lets an assessee defer identical legal issues pending higher court decisions.
Clause 375 permits an assessee to file a prescribed declaration to defer litigation where an identical question of law is pending in another case before a higher forum; the authority must verify the claim with a report from the Assessing Officer and an opportunity to be heard, and may admit or reject the claim by reasoned written order which is final. If admitted, the case may be disposed of without awaiting the other case's decision, the assessee is barred from raising the issue in further appeals for that case, and the final decision in the other case must be applied, with amendment of earlier orders if necessary.

Power to frame schemes enables broad faceless, technology driven tax administration with authority to modify statutory application.
Clause 532 grants the Central Government power to notify schemes for any purposes of the Income Tax Act to enhance efficiency, transparency and accountability by eliminating taxpayer interface where technologically feasible and optimising resource use; it further authorises notifications to modify application of Act provisions for scheme implementation, allows amendment of existing schemes under the prior law, and requires that such notifications be laid before Parliament.