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    Source-based taxation requires payers to withhold tax on non-resident sports and entertainment fees, ensuring collection at source.
    Clause 393(2)[Table: S.No.1] mandates a tax deduction at source on payments to non-resident sportsmen, entertainers, and non-resident sports associations or institutions for income referred to in section 211, imposing the obligation on any person making the payment to deduct tax at the earlier of credit or payment. The provision specifies a flat withholding rate, explicitly addresses grossing up for net-of-tax contracts, and is integrated within wider TDS subsections providing exceptions and administrative rules.
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    TDS on non-exempt life insurance payouts: mandatory deduction on the taxable component with a declaration option to avoid deduction.
    Clause 393(1)[Table: S.No. 8(i)] of the Income Tax Bill, 2025 requires any person paying sums under a life insurance policy, including bonuses and excluding amounts not includible under Schedule II, to deduct TDS at 2% on the "income comprised in such sum". Deduction is required only where the aggregate payout to a payee in a tax year exceeds the specified threshold, and it must be effected at the earlier of credit or payment. Sub-section 6 allows a declaration for non-deduction where estimated aggregate income is below the exemption limit.
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    TDS on insurance commission: mandatory deduction at earlier of credit or payment, with threshold and declaratory relief.
    Clause 393(1)[Table: S.No.1(i)] requires deduction of tax at source on remuneration or reward for soliciting, procuring, continuing, renewing or reviving insurance business, payable by "any person", at the earlier of credit or payment, when aggregate payments to a payee exceed the specified threshold; rates are those in force and the provision expands scope to include incentives and other remuneration while providing a declaration-based mechanism for no deduction and deeming credit to suspense accounts as credit to the payee.
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    TDS on contractor payments upheld with clarified scope, invoice rules and procedural reporting for targeted exemptions.
    Clause 393(1)[Table: S.No. 6(i)] applies TDS to sums for carrying out work, including supply of labour, payable by a designated person, preserving differential rates for individuals/HUFs and others, applying deduction at credit or payment, allowing exclusion of material where separately invoiced, and aggregating payments for threshold purposes, subject to specified exceptions and procedural requirements.
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    TDS on horse-race winnings: single-transaction threshold triggers deduction at payment, integrated into unified TDS framework.
    Clause 393(3)[Table: S.No. 3] mandates TDS on horse-race winnings by bookmakers or licensed operators at prevailing rates where winnings in a single transaction exceed the threshold, requires deduction at payment irrespective of mode, and integrates these obligations into Clause 393's unified procedural framework while leaving open interpretive issues such as the definition of "single transaction," aggregation risk, and valuation of non-cash payouts.
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    TDS on online gaming winnings: mandatory source deduction on net winnings, requiring payer compliance, reporting, and collection for noncash prizes.
    Clause 393(3)[Table: S.No. 2] mandates TDS on "any income by way of winnings from online game" payable or credited by "any person," requiring deduction at "rates in force" on net winnings (as per Note 1) at the time of payment or credit, irrespective of mode of payment including cash, kind, credits or digital assets; payer obligations include computation, deduction, remittance, certification and reporting, with standard consequences for non-compliance.
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    TDS on gaming winnings: tax must be deducted at payment with a single-transaction threshold and special rules for non-cash prizes.
    Clause 393(3)[Table: S.No.1] requires payers to deduct tax at source at rates in force on winnings from lotteries, puzzles, card games, other games, gambling and betting at the time of payment. The provision applies to cash and in-kind prizes and uses a single-transaction threshold to trigger TDS; payers must ensure tax is paid before releasing non-cash prizes. Online gaming winnings are excluded from this sub-clause and treated separately. General TDS reporting and deposit obligations apply.
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    TDS on interest: Bill raises senior citizen threshold and consolidates exemptions, altering deductor obligations and clarifying procedures.
    Clause 393(1)[Table: S.No. 5(ii) & 5(iii)] prescribes TDS on interest other than on securities by distinguishing banking companies, co operative banks and post offices (subject to higher thresholds) from other specified payers (subject to a lower threshold), fixing time of deduction as credit or payment whichever is earlier, retaining branch wise aggregation where core banking is absent, and allowing intra year adjustment; Clause 393(4)[Table: S.No. 7] lists exemptions mirroring institutional and co operative carve outs with turnover conditions and freezes new ad hoc notifications after the stipulated cutoff.
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    TDS on dividends: new Bill mandates deduction before distribution, retaining specified institutional and small-holder exemptions.
    Clause 393(1) requires TDS on all dividends (including preference shares) paid by domestic companies to resident shareholders at a flat rate, deducted before any distribution; Clause 393(4) lists conditional exemptions for specified institutional investors, notified persons, and small individual shareholders receiving dividends by non-cash modes, with exemptions contingent on payee type, payment mode, and aggregate amounts during the tax year.
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    The Bill reaffirms TDS on interest on securities payable to residents, requiring deduction at the earlier of credit or payment at prevailing rates, subject to an aggregate annual threshold. It consolidates instrument based and entity based exemptions in a notified table, preserves the government's notification power to add exemptions, and modernizes language to reflect current financial instruments. Procedural rules permit declarations for non deduction with clearer delivery and reporting timelines for payers, require documentation to justify non deduction, and emphasize tracking aggregate payments and timely reporting and deposit to improve compliance and reduce disputes.
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    Tax deduction at source on provident fund withdrawals ensures immediate withholding at payment for taxable lump sum withdrawals.
    Clause 392(7) requires trustees or authorised persons of recognised provident funds to deduct tax at source at a uniform rate when paying accumulated balances that are includible in the employee's income because exemption conditions under the relevant schedule do not apply; the obligation arises at the time of payment and only where the aggregate payment exceeds a prescribed threshold, with trustees responsible for deposit, recordkeeping and issuing withholding certificates.
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    Tax Deduction at Source on Salaries modernizes employer TDS obligations and clarifies perquisite and reporting requirements.
    Clause 392 modernizes Tax Deduction at Source on salaries by retaining the employer duty to deduct tax at the average rate on estimated salary payments, preserving the employer option to pay tax on non monetary perquisites (treated as TDS), providing special timing for start up equity perquisites, and requiring employers to consider specified employee declarations (other salary, reliefs, house property loss, other income, and tax deducted elsewhere) subject to limitations on reductions. It mandates prescribed statements, evidence, record keeping, and permits intra year TDS adjustments, with procedural details to be set by rules.
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    Direct payment obligation makes the recipient liable where TDS is absent, with deductor deemed in default if both parties fail.
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    Tax Collection at Source: payment obligations arise with income receipt and stand independent of later assessments.
    Clause 390 mandates three modes of tax payment-deduction or collection at source, advance payment, and payment under section 392(2)(a)-to be effected "as per this Chapter," establishes that these obligations arise irrespective of later assessment proceedings, and includes a savings provision preserving the substantive charge to tax under section 4(1), thereby ensuring collection mechanisms do not affect the underlying tax liability.
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    Continuity of tax liability: dissolved firms treated as continuing for assessment, penalties, and recovery under new clause.
    Clause 330 treats a dissolved or discontinued firm as continuing for assessment and recovery, empowering tax authorities to assess total income, impose penalties, and apply all Act provisions; it imposes joint and several liability on partners and legal representatives and permits continuation of proceedings at the stage they stood at dissolution, while preserving other relevant statutory provisions through a saving clause.
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    Joint and several liability of partners: partners and estates may be pursued for firm tax and related penalties under the new Bill.
    The Bill imposes joint and several liability on every person who was a partner during the tax year and on the legal representatives of deceased partners for tax, penalty and other sums payable by the firm, allowing recovery from the firm or any partner and applying the Act's assessment, recovery and penalty machinery to such liabilities.
    Act RulesBills
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    Succession of partnership firms requires separate assessments to apportion tax between predecessor and successor periods.
    Clause 328 mandates separate assessments where a firm is succeeded by another: income up to succession is assessed in the predecessor's hands and income thereafter in the successor's hands, with procedural rules to be applied as per Section 313; the clause excludes cases covered by the provision addressing change in constitution, preserving the distinction between succession and mere partner changes.
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    Change in constitution of a firm: assessment on the firm as constituted at assessment time, preserving tax continuity.
    Change in constitution of a firm provides that assessment shall be on the firm as constituted at the time of assessment where partners cease, new partners are admitted (with at least one pre existing partner continuing), or shares change; an exception preserves dissolution on the death of a partner. The clause modernizes language and cross references to updated assessment provisions, maintains continuity in tax liability, and places emphasis on partnership deeds, record keeping, and potential factual disputes over reconstitution versus succession.
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    Procedural compliance in partnership taxation: noncompliance bars firm deductions for partner payments while avoiding partner double taxation.
    Clause 326 of the Income Tax Bill, 2025, applies where a partnership firm fails to comply with Clause 325 procedural requirements; it invokes a non-obstante override to disallow deductions for payments to partners described as interest, salary, bonus, commission or remuneration, and concurrently excludes those disallowed amounts from taxation in the hands of partners, mirroring the substantive effect of the earlier statute while updating cross-references and structure.
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    Firm assessment requirements: written certified partnership instrument needed, with non compliance causing denial of partner deductions.
    Clause 325 requires that a partnership be evidenced by a written instrument specifying each partner's share and that a certified copy accompany the return when assessment as a firm is first sought; certification must be by all partners (excluding minors) or relevant predecessors/representatives on dissolution. Once assessed as a firm, continuity of assessment applies unless the firm's constitution or shares change, in which case a revised certified instrument must be filed and the conditions reapply. Failure to comply triggers denial of deductions for payments to partners and prevents those payments from being taxed in the partners' hands.

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      Illegality of Arrest and Remand for Non-Supply of Written Grounds: The Two-Hour Pre-Remand Standard under the BNSS Framework

      4 February, 2026

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      This note presents a concise research digest of the judicial decision, summarising the key issues, findings, and outcome. The judgment is analysed in the context of its factual background, issues framed, and conclusions reached by the Court.

      2025 (11) TMI 367 - Supreme Court

      Case Snapshot

      A set of criminal matters raised a recurring constitutional question: whether an arrested person must be furnished the grounds of arrest in writing, and whether failure to do so necessarily vitiates the arrest and subsequent remand. The Court treated the issue as one of general legal position under Article 22(1) of the Constitution of India and the corresponding procedural mandate in Section 50 of the Code of Criminal Procedure, 1973 (now Section 47 of the Bharatiya Nagarik Suraksha Sanhita, 2023).

      The Court held that communication of grounds of arrest is a mandatory constitutional safeguard applicable across offences and statutes. As a general rule, grounds of arrest must be communicated in writing, in a language understood by the arrestee. However, in exceptional situations where furnishing written grounds at the moment of arrest is impractical, oral communication at the time of arrest may suffice temporarily, subject to written grounds being supplied within a reasonable time and, in any event, at least two hours before production for remand.

      On the case outcomes, the Court disposed of one matter after settling the legal position, continued interim bail in connected matters (with liberty to seek remand after supplying written grounds), and continued interim bail in a tagged matter while directing it to be listed before an appropriate Bench.

      Material Facts

      The lead matter arose from a road traffic incident alleged to involve rash and high-speed driving, resulting in a fatality and injuries. An FIR was registered invoking provisions of the Bharatiya Nyaya Sanhita, 2023 and the Motor Vehicles Act, 1988. The investigation included reliance on CCTV footage and other materials said to link the appellant to the driving of the vehicle at the relevant time.

      The appellant was arrested without a warrant. During remand proceedings, the appellant challenged the legality of arrest and custody on the ground that the grounds of arrest were not furnished in writing, invoking Article 22(1) of the Constitution of India and Section 50 of the Code of Criminal Procedure, 1973, corresponding to Section 47 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

      A writ challenge to the arrest was considered by the High Court (not identified here). While acknowledging a procedural lapse, the High Court upheld the validity of arrest, reasoning (in substance) that the appellant was aware of the nature of allegations and that the circumstances justified custody despite non-furnishing of written grounds. The appellant approached the Court to settle the legal position on the requirement of furnishing grounds of arrest in writing.

      In connected matters raising similar questions, interim bail had been granted during pendency. An amicus curiae was appointed to assist the Court.

      Issue Involved

      The Court framed the controversy around Article 22(1) of the Constitution of India and the statutory reflection of that safeguard in Section 50 of the Code of Criminal Procedure, 1973 (now Section 47 of the Bharatiya Nagarik Suraksha Sanhita, 2023):

      • Whether, in each and every case (including ordinary penal offences under the Indian Penal Code, 1860, now the Bharatiya Nyaya Sanhita, 2023), it is necessary to furnish grounds of arrest to an accused either before arrest or forthwith after arrest.
      • Whether, even in exceptional cases where exigencies prevent furnishing grounds of arrest before arrest or immediately after arrest, the arrest stands vitiated for non-compliance with Section 50 of the Code of Criminal Procedure, 1973 (now Section 47 of the Bharatiya Nagarik Suraksha Sanhita, 2023).

      Closely connected to these questions were two operational aspects: (i) the mode of communication (oral versus written), and (ii) the time by which the grounds must be supplied to preserve the constitutional purpose of enabling legal consultation and meaningful opposition to remand.

      Decision

      The Court crystallised the following holdings:

      (1) Universality of the safeguard.Article 22(1) of the Constitution of India imposes a mandatory obligation to inform the arrestee of the grounds of arrest "as soon as may be". This obligation is not statute-specific and applies to arrests for offences under all statutes, including offences under the Indian Penal Code, 1860 (now Bharatiya Nyaya Sanhita, 2023) as well as special laws.

      (2) Written communication as the governing rule. The grounds of arrest must be communicated in writing to the arrestee, in the language the arrestee understands, to fulfil the intended constitutional purpose of enabling consultation with counsel and effective participation in remand proceedings.

      (3) Exceptional impracticability and calibrated timeline. Where furnishing written grounds at the time of arrest or soon after arrest is impractical (illustrated by arrests in situations akin to flagrante delicto offences against body or property), it is sufficient to orally convey the grounds at the time of arrest. However, a written copy must then be supplied within a reasonable time and, in any event, not later than two hours prior to production before the Magistrate for remand proceedings. The remand papers must contain the grounds of arrest, and any delay in supplying written grounds must be explained by a note to the Magistrate.

      (4) Consequence of non-compliance. Failure to adhere to the above schedule renders the arrest and subsequent remand illegal, entitling the arrestee to be set at liberty. Thereafter, if custody/remand is still sought, it may be moved for after supplying the written grounds, with reasons for earlier non-supply; the Magistrate is to decide such an application expeditiously and preferably within a week, consistent with natural justice.

      Applying this to case management: the Court disposed of one matter after clarifying the legal position; continued interim bail in connected matters while permitting the prosecution to move for remand/custody after supplying written grounds; and continued interim bail in a tagged matter while directing further listing before an appropriate Bench.

      Key Observations

      Constitutional foundation. The Court located the requirement of communicating grounds of arrest within Article 21 (procedure established by law protecting personal liberty) and Article 22(1) (prompt intimation of grounds and right to consult and be defended by counsel). The statutory vehicle giving effect to Article 22(1) was identified as Section 50 of the Code of Criminal Procedure, 1973, corresponding to Section 47 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

      Associated safeguards under the BNSS/CrPC scheme. The Court emphasised that the architecture of protections is not limited to Section 47BNSS (Section 50 CrPC). Section 50A of the Code of Criminal Procedure, 1973 (now Section 48 of the Bharatiya Nagarik Suraksha Sanhita, 2023) obligates the arresting authority to inform a relative/friend/nominated person about the arrest and place of detention, with the Magistrate having a duty to verify compliance under Section 48(4)BNSS. The Court also referred to Section 38 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (right to meet an advocate during interrogation, though not throughout) and to remand-related provisions: Section 167 of the Code of Criminal Procedure, 1973 (now Section 187BNSS) read with Section 57 CrPC (now Section 58BNSS), underscoring that remand is a judicial function requiring application of mind, not a mechanical act.

      Meaningful communication and the writing requirement. The Court reasoned that mere oral reading of grounds may be ineffective, particularly when the arrestee is not in a position to retain and recall details, and it can generate factual disputes about whether communication occurred. Written grounds, acknowledged by the arrestee, support both constitutional efficacy and procedural certainty. The Court's approach aligns with the broader principle that fundamental rights protections must be practical and enforceable, not illusory.

      Language understood by the arrestee. Drawing from established doctrine under Article 22(5) concerning preventive detention, the Court treated the expression "communicate" as requiring that the grounds be brought home to the person in a manner enabling effective representation. Accordingly, the grounds must be furnished in a language the arrestee understands, and in a script the person can read if literate. Oral explanation of written grounds in an unfamiliar language was considered inadequate for this constitutional purpose.

      Balancing rights with operational exigencies. While characterising Article 22(1) as unexceptional in its obligation to inform grounds, the Court nevertheless acknowledged field realities where immediate written grounds may be impracticable. The solution adopted was not to dilute the right, but to structure an enforceable timeline: oral grounds at the point of arrest in exceptional cases, followed by written grounds within a reasonable time, but mandatorily at least two hours before remand production. The "two-hour" minimum interval was justified as functionally necessary to enable counsel to examine the grounds and prepare to oppose remand effectively.

      Consequences and curative pathway. Non-compliance leads to illegality of arrest and remand and entitlement to release. At the same time, the Court indicated a procedural route for the investigating agency to seek remand afresh after compliance, with reasons for earlier non-supply placed before the Magistrate, who must decide expeditiously and preferably within a week.

      Practical Relevance

      For police and investigating agencies. For arrests without warrant, Section 47BNSS 2023 (Section 50 CrPC 1973) must be operationalised through written grounds as a general rule, in the language understood by the arrestee. In document-heavy or pre-planned arrests where grounds are already available (including situations where the accused has joined investigation after notice under Section 41A CrPC 1973, corresponding to Section 35(3) to 35(6)BNSS 2023), written grounds should be handed over contemporaneously with arrest. In exigent arrests (including flagrante delicto situations), oral grounds at arrest are permissible, but written grounds must follow within reasonable time and at least two hours before remand production; remand papers should include grounds and any delay note.

      For remand advocacy and legal aid. The requirement directly affects the remand stage under Section 187BNSS 2023 (Section 167 CrPC 1973). Defence counsel may test compliance by asking when and in what language written grounds were supplied, and whether supply occurred at least two hours prior to remand production. The Court's reasoning also reinforces the importance of early access to legal assistance at pre-remand stages, and the Magistrate's duty to ensure procedural compliance rather than treating remand as routine.

      For Magistrates. Magistrates are expected to verify compliance with Section 48BNSS 2023 (Section 50A CrPC 1973) regarding intimation to relatives/friends, and to be alive to the constitutional purpose of Article 22(1) when authorising detention under Section 187BNSS 2023. Where written grounds are supplied late, the existence of an explanatory note in remand papers becomes relevant. If non-compliance is established, custody is illegal, and any fresh remand request must follow supply of written grounds with reasons for earlier non-supply.

      For litigation strategy. Challenges to arrest and remand can now be structured around a clear compliance matrix: (i) whether grounds were communicated, (ii) whether they were in writing, (iii) whether they were in a language understood, and (iv) if not immediate, whether written grounds were supplied within reasonable time and at least two hours before remand production. The decision thus provides a concrete framework for adjudicating disputes that otherwise degenerate into contested assertions of oral communication.

       


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      2025 (11) TMI 367 - Supreme Court

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