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    Determination of tax liability which no tax is payable under the provisions of the Act : Clause 190 ...
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    Act RulesBills
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    Determination of tax where exempt income is included: deduction at the average tax rate neutralises tax on non chargeable income.
    Clause 190 provides that where total income includes income on which no income-tax is payable, the assessee is entitled to a deduction from the tax chargeable equal to the tax computed at the average rate of income-tax on that non-taxable amount; the average rate is derived by dividing total tax by total income and applying that rate to the exempt portion to neutralise any tax attributable to non-chargeable income.
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    General Anti Avoidance Rule expansion: new accommodating party concept widens GAAR reach and tightens tax planning scrutiny.
    Clause 184 of the Income Tax Bill, 2025 largely carries forward Section 102's wide definitions for GAAR-covering arrangement, asset, benefit, connected person, fund, party, step, and tax benefit-while introducing an accommodating party concept to capture third party facilitators, updating cross references and terminology (e.g., "tax year"), and explicitly including permanent establishments and treaty arrangements to strengthen anti avoidance coverage.
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    General Anti-Avoidance Rule expanded to permit concurrent or substitutive application, increasing substance-over-form scrutiny.
    Clause 183 expands the statutory reach of the General Anti-Avoidance Rule (GAAR) by expressly permitting GAAR to apply "in addition to, or in lieu of" any other basis for determination of tax liability, while maintaining application "as per such guidelines and subject to such conditions, as prescribed." The clause enables authorities to apply a substance-over-form approach, allowing concurrent or exclusive use of GAAR alongside specific anti-avoidance or substantive provisions, and thereby alters the relationship between GAAR and SAARs previously left ambiguous under Section 101.
    Act RulesBills
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    General Anti Avoidance Rule: clause makes GAAR an overriding tool but conditions its use on prescribed procedural guidelines.
    Clause 183 preserves GAAR's authority to apply "in addition to, or in lieu of" other bases for tax determination, enabling recharacterisation of arrangements based on substantive economic realities. It uniquely conditions GAAR's exercise on "guidelines and...conditions, as prescribed," thereby mandating subordinate guidance to define thresholds, approval processes, taxpayer rights, documentation and timelines, with the intent of reducing arbitrariness and enhancing predictability compared with the earlier framework.
    Act RulesBills
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    General Anti-Avoidance Rule: Treat connected and accommodating parties as one, enabling look-through of corporate structures.
    Clause 182 authorises treating connected persons as one, disregarding an accommodating party, treating an accommodating party and another party as the same person, and looking through corporate structures to determine whether a tax benefit exists, thereby enabling recharacterisation of arrangements that lack commercial substance and are designed to secure tax advantages.
    Act RulesBills
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    General Anti Avoidance Rule: broad authority to recharacterise and deny tax benefits where arrangements lack commercial substance.
    Clause 181 empowers tax authorities to neutralise tax benefits from arrangements lacking commercial substance by denying benefits (including treaty benefits) and imposing a range of consequences: disregarding or recharacterising steps or whole arrangements; treating arrangements as not entered into; treating accommodating or connected parties as one; reallocating tax attributes; recharacterising residence or situs; and looking through corporate structures. Clause 181(3) authorises reclassification of equity/debt and capital/revenue character. Rule 10UA limits consequences to the impermissible part of an arrangement, providing proportionality.
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    Commercial substance test: disregard arrangements whose economic effect differs from form, focusing on round-trips and artificial parties.
    An arrangement may be disregarded for tax purposes if it lacks commercial substance, determined by whether the overall economic effect differs materially from its formal steps; key indicators include round-trip financing, an accommodating party, offsetting elements, disguised transactions, relocations made for tax benefit, and arrangements that do not materially affect business risks or cash flows independent of tax. Certain factors-duration, taxes paid, or an exit route-are not alone sufficient to establish substance, and the Bill omits a prior explicit definition of accommodating party, potentially creating interpretive uncertainty.
    Act RulesBills
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    GAAR main purpose test targets arrangements primarily motivated by tax benefit, with procedural safeguards for invocation.
    Clause 179 defines an impermissible avoidance arrangement under GAAR as one whose main purpose is obtaining a tax benefit and which meets at least one of four tainting conditions: arm's length departure, misuse or abuse of law, lack of commercial substance, or non bona fide means; it creates a rebuttable presumption placing the burden on the taxpayer for impugned steps and is operationalized through Rule 10UB's pre reference notice, Commissioner review, and Approving Panel safeguards.
    Act RulesBills
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    General Anti-Avoidance Rule: empowers authorities to disregard abusive arrangements and recharacterise tax consequences subject to safeguards.
    Clause 178 codifies GAAR with an overriding non-obstante effect, enabling authorities to declare an arrangement an "impermissible avoidance arrangement" and determine tax consequences, applying to whole arrangements or any step or part, based on tests of commercial substance and main purpose, while procedural safeguards-notice, hearing, and an approving panel-are prescribed to temper broad remedial powers.
    Act RulesBills
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    Interest deduction limitation restricts deductible interest to a fixed EBITDA ratio with carryforward relief and specified carve-outs.
    Limitation on deductible interest in cross border related party financing restricts interest deductions where interest paid or payable by Indian entities to non resident associated enterprises is treated as excess interest, capped by a fixed ratio of the borrower's EBITDA and by interest payable to associated enterprises; disallowed amounts are carry forwardable subject to the same ratio, a deeming rule treats economically supported third party loans as associated enterprise debt, and specified carve outs apply to regulated financial entities and bona fide IFSC Finance Companies under operational rules.
    Act RulesBills
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    Transactions with non-cooperative jurisdictions: treated as international transactions, triggering transfer pricing scrutiny and denial of deductions.
    Clause 176 creates a regime for transactions with persons in notified jurisdictional areas: government notification power; deeming parties as associated enterprises and transactions as international transactions for transfer pricing; disallowance of deductions absent prescribed authorisation and documentation; deeming unexplained receipts as assessable income; and mandatory higher withholding on payments to NJA persons, with broad definitions and anticipated procedural rules similar to Rule 21AC.
    Act RulesBills
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    Anti-avoidance in securities transactions deems income to the economic owner to prevent dividend and bonus stripping abuse.
    Clause 175 establishes a deeming regime that treats dividends and interest received by an interposed holder as the income of the original economic owner where securities are transferred and subsequently reacquired, limits taxpayer liability where similar securities are acquired, apportions income for partial-year beneficial interest holders, provides exceptions if the taxpayer proves absence of avoidance, disallows losses from dividend and bonus stripping within prescribed acquisition and disposal windows, and treats disallowed bonus-related losses as cost adjustments for retained units.
    Act RulesBills
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    Deeming of income transferred to non-residents prevents tax avoidance by treating economic beneficiaries as taxable residents.
    Clause 174 applies where a transfer of assets, before or after commencement, results in income payable to a non-resident, and where the transfer alone or with associated operations confers on any person rights that give the power to enjoy that income. Such income is deemed to be that person's income for all purposes; related capital sums are treated to prevent disguise as non-taxable receipts. Exceptions exist for bona fide commercial transactions, with the taxpayer bearing the burden to satisfy the assessing authority.
    Act RulesBills
    Show AI Summary
    Arm's length price principle reaffirmed and clarified in revised transfer pricing definitions, with expanded enterprise and transaction scope.
    Clause 173 of the Income Tax Bill, 2025 restates and refines transfer pricing definitions: arm's length price as the benchmark between independent parties in uncontrolled conditions; an expansive definition of "enterprise" covering goods, IP, services, contracts, investments and securities (directly or via units/subsidiaries); "permanent establishment" as a fixed place of business; and "transaction" to include informal or non enforceable arrangements. The clause updates the "specified date" cross reference to the Bill's return filing provision and adopts more itemised drafting while maintaining substantive continuity with Section 92F.
    Act RulesBills
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    Accountant's report requirement: certified transfer pricing reporting mandated for international and specified domestic transactions, with prescribed form and timing.
    Clause 172 requires every person entering into an international or specified domestic transaction in a tax year to obtain and furnish, by the specified date, a report from an accountant in the prescribed form, signed and verified as prescribed, setting forth such particulars as may be prescribed; the clause makes the obligation statutory, preserves applicability across taxpayer categories, and defers procedural form, verification and timing details to subordinate legislation while maintaining continuity with the existing reporting mechanics.
    Act RulesBills
    Show AI Summary
    Transfer pricing documentation: contemporaneous records required and rapid furnishing on demand to enhance transparency and enforcement.
    Clause 171 mandates maintenance and furnishing of prescribed transfer pricing documentation by persons entering into international or specified domestic transactions and by constituent entities of international groups, while delegating the specific content, retention periods, thresholds and filing procedures to rules. It enshrines a ten day furnishing requirement with possible extension, cross references definitions to the Bill's reporting provisions, and anticipates master file, local file and country by country reporting formats, thereby consolidating and modernising existing documentary obligations.
    Act RulesBills
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    Secondary adjustment: statutory deemed advance and repatriation rule with alternative option to pay additional tax in lieu of interest.
    Clause 170 mandates secondary adjustment where a primary transfer pricing adjustment of a prescribed monetary threshold increases income or reduces loss and excess money is not repatriated within the prescribed time; unrepatriated excess is deemed an advance to any non-resident associated enterprise and attracts notional interest computed as prescribed, with an alternative statutory option to pay an additional income-tax that is final and bars further credit or deduction.
    Act RulesBills
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    Advance Pricing Agreement application: modified returns must align tax assessments with agreed transfer pricing terms and timelines.
    The statutory mechanism requires taxpayers to furnish a modified return limited to APA-impacted items within a prescribed post-agreement period, treats that filing as a return for assessment purposes, and directs assessing officers to modify completed assessments or complete pending proceedings in accordance with the APA; designated limitation and deeming provisions clarify timelines and the status of proceedings to ensure retrospective yet circumscribed implementation of the APA.
    Act RulesBills
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    Advance pricing agreements secure pre determination of arm's length pricing to enhance transfer pricing certainty and reduce disputes.
    Clause 168 preserves the APA framework by empowering the Board, with Central Government approval, to determine the arm's length price or manner of attributing income to India for international transactions; to specify statutory and rule based methods (with adjustments); to make APAs prevail over general transfer pricing provisions; to bind both taxpayers and tax authorities for covered transactions; to permit rollback for prior years; and to declare APAs void ab initio for fraud or misrepresentation, with corresponding limitation period consequences and scheme making authority for procedural rules.
    Act RulesBills
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    Safe harbour rules mandate acceptance of declared transfer prices and deemed income, delivering taxpayer certainty while limiting administrative discretion.
    Clause 167 empowers the Board to prescribe safe harbour rules under which income-tax authorities shall accept the transfer price or deemed income declared by the assessee for transactions falling within section 9(2) and arm's length price provisions, creating a statutory presumption that reduces administrative discretion and dependency on detailed rule-making to specify eligibility, thresholds, documentation, and procedural requirements.

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      AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975

      3 February, 2020

      Contents
      Rules & Regulations
      Plus +
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      Budget 2020-21 + FINANCE BILL, 2020

      AMENDMENTS

      A.

      Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2020] * [Clause 115 (a) of the Finance Bill, 2020]

      Rate of Duty

      S.No.

      Heading, sub-heading, tariff item

      Commodity

      From

      To

       

       

      Food processing

       

       

      1.

      0802 32 00

      Walnuts, shelled

      30%

      100%

       

       

      Chemicals

       

       

      2.

      3824 99 00

      Other Chemical products and preparations of the chemical or allied industries, not elsewhere specified

      10%

      17.5%

       

       

      Footwear

       

       

      3.

      6401, 6402,

      6403, 6404, 6405

      Footwear

      25%

      35%

      4.

      6406

      Parts of footwear

      15%

      20%

       

       

      Household Items

       

       

      5.

      6911 10, 6911 90 20, 6911 90 90

      Tableware, kitchenware, water filters (of a capacity not exceeding 40 litres) and other household articles, of porcelain of china.

      10%

      20%

      6.

      6912 00 10, 6912 00 20, 6912 00 40, 6912 00 90

      Ceramic tableware, kitchen-ware, clay articles and other household articles

      10%

      20%

      7.

      7013

      Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or Similar purposes (other than that of heading 7010 or 7018)

      10%

      20%

      8.

      7323

      Table kitchen or other household articles and parts thereof, of iron or steel, iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel, including pressure cookers pans utensils, misc articles such as iron & steel wool, polishing pads, gloves etc.

      10%

      20%

      9.

      7418 10

      Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper.

      10%

      20%

      10.

      7615 10

      Table, kitchen or other household articles and parts thereof, of aluminum; pot scourer and scouring or polishing pads, gloves and the like, of aluminum.

      10%

      20%

      11.

      8301

      Padlocks and locks (key, combination or electrically operated) of base metal; Clasps and frames with clasps, incorporating locks of base metals; keys for any of the foregoing articles, of base metals (Other than lock of a kind used for automobiles.)

      10%

      20%

      12.

      9603

      Brooms, brushes, hand operated mechanical floor sweepers, not motorized, mops and feather dusters; prepared knots and tufts for broom or brush making; paint pads and rollers; Squeegees (other than roller squeegees).

      10%

      20%

      13.

      9604 00 00

      Hand sieves and hand riddles.

      10%

      20%

      14.

      9615

      Combs, hair-slides and the like, hairpins curling pins, curling grips, hair curlers and the like other than those of heading 8516 and parts thereof.

      10%

      20%

      15.

      9617

      Vacuum flasks and other vacuum vessels, complete with cases; parts thereof other than glass inners.

      10%

      20%

      16.

      8414 51 10

      Table Fans

      10%

      20%

      17.

      8414 51 20

      Ceiling Fans

      10%

      20%

      18.

      8414 51 30

      Pedestal Fans

      10%

      20%

      19.

      8414 59 20

      Blowers, Portable

      10%

      20%

      20.

      8509 40 10

      Food Grinders

      10%

      20%

      21.

      8509 40 90

      Other grinders and Mixer

      10%

      20%

      22.

      8509 80 00

      Other Appliances

      10%

      20%

      23.

      8510 10 00

      Shavers

      10%

      20%

      24.

      8510 20 00

      Hair Clippers

      10%

      20%

      25.

      8510 30 00

      Hair-removing appliances

      10%

      20%

      26.

      8516 10 00

      Water heaters and immersion heaters

      10%

      20%

      27.

      8516 21 00

      Storage heating radiators

      10%

      20%

      28.

      8516 29 00

      Other electrical space heating apparatus

      10%

      20%

      29.

      8516 31 00

      Hair Dryers

      10%

      20%

      30.

      8516 32 00

      Other hair dressing apparatus

      10%

      20%

      31.

      8516 33 00

      Hand Drying apparatus

      10%

      20%

      32.

      8516 40 00

      Electric smoothing irons

      10%

      20%

      33.

      8516 60 00

      Other ovens, cookers, cooking plates, boiling rings, grillers and roasters

      10%

      20%

      34.

      8516 71 00

      Coffee and Tea Makers

      10%

      20%

      35.

      8516 72 00

      Toasters

      10%

      20%

      36.

      8516 79 10

      Electro-thermic fluid heaters

      10%

      20%

      37.

      8516 79 20

      Electrical or electronic devices for repelling insects

      10%

      20%

      38.

      8516 79 90

      Other electro-thermic appliances used for domestic purposes

      10%

      20%

      39.

      8516 80 00

      Electric heating resistors

      10%

      20%

       

       

      Precious Metals

       

       

      40.

      7118

      Coin

      10%

      20%

       

       

      Machinery

       

       

      41.

      8414 51 40

      Railway Carriage fans

      7.5%

      10%

      42.

      8414 51 90

      Other fans with a self-contained electric motor not exceeding 125W

      7.5%

      20%

      43.

      8414 59 10

      Air Circulator

      7.5%

      10%

      44.

      8414 59 30

      Industrial fans blowers and similar blowers

      7.5%

      10%

      45.

      8414 59 9

      Other industrial fans

      7.5%

      10%

      46.

      8414 30 00, 8414 80 11

      Compressor of Refrigerator and Air conditioner

      10%

      12.5%

      47.

      8419 89 10

      Pressure vessels

      7.5%

      10%

      48.

      8418 10 10

      Commercial type combined refrigerator freezers, fitted separate external doors

      7.5%

      15%

      49.

      8418 30 10

      Commercial freezer of chest type, not exceeding 800 litre capacity

      7.5%

      15%

      50.

      8418 30 90

      Other chest type freezers

      10%

      15%

      51.

      8418 40 10

      Electrical freezers of upright type, not exceeding 800 litre capacity

      7.5%

      15%

      52.

      8418 40 90

      Other freezers of upright type, not exceeding 800 litre capacity

      7.5%

      15%

      53.

      8418 50 00

      Refrigerating or freezing display counters, cabinets, Show-cases and the like

      7.5%

      15%

      54.

      8418 61 00

      Heat pumps other than air conditioning machines

      7.5%

      15%

      55.

      8418 69 10

      Ice making machinery

      7.5%

      15%

      56.

      8418 69 20

      Water cooler

      10%

      15%

      57.

      8418 69 30

      Vending machine, other than automatic

      10%

      15%

      58.

      8418 69 40

      Refrigerating equipment/devices used in leather industry

      7.5%

      15%

      59.

      8418 69 50

      Refrigerated farm tanks, industrial ice cream freezer

      7.5%

      15%

      60.

      8418 69 90

      Others (like freezers of capacity 800 litres and more etc.]

      7.5%

      15%

      61.

      8515 (except 8515 90 00)

      Welding and Plasma cutting machines

      7.5%

      15%

       

       

      Other Electronic goods

       

       

      62.

      8504 40 (except 8404 40 21)

      Static Converters

      15%

      20%

      63.

      8504 40 21

      Dip bridge rectifier

      10%

      20%

      64.

      8517 70 10

      Populated, loaded or stuffed printed circuit boards

      10%

      20%

       

       

      Automobile and automobile parts

       

       

      65.

      8421 39 20, 8421 39 90

      Catalytic Convertor

      10%

      15%

       

       

      Furniture Goods

       

       

      66.

      9401

      Seats and parts of seats (other than aircraft seats and their parts)

      20%

      25%

      67.

      9403

      Other Furniture and parts thereof

      20%

      25%

      68.

      9404

      Mattress supports: Articles of bedding and similar furnishing

      20%

      25%

      69.

      9405

      Lamps and lighting fittings including searchlights and spotlights and pads thereof; Illuminated signs, illuminated name plates and the like, having a permanently fixed light source, and parts thereof (except solar lantern and solar lamps).

      20%

      25%

       

       

      Toys

       

       

      70.

      9503

      Tricycles, scooters, pedal-cars and similar wheeled-toys; dolls' carriages; dolls; other toys; reduced-Size (“scale”) models and similar recreational models, working or not; puzzles of all kinds

      20%

      60%

       

       

      Stationary items

       

       

      71.

      8304 00 00

      Filing, cabinets. card-index cabinets, paper-trays, paper rests, pen trays, office-stamp stands and similar office or desk equipment of base metal, Other than office furniture of heading 9403

      10%

      20%

      72.

      8305

      Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal

      10%

      20%

      73.

      8310

      Sign-plates, name-plates, address-plates and similar plates, numbers, letters and other symbols, of base metal, excluding those of heading 9405

      10%

      20%

       

       

      Miscellaneous

       

       

      74.

      6702

      Artificial Flowers

      10%

      20%

      75.

      7018 10 20

      Glass Beads

      10%

      20%

      76.

      8306

      Bells, gongs, statuettes, trophies and like, non-electric of base metal; statuettes and other ornaments of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal.

      10%

      20%

      B.

      New entries added to the First Schedule [to be effective from 02.02.2020] * [Clause 115(b) of the Finance Bill, 2020]

      S. No

      Tariff Item

      Description

      Tariff Rate

      Effective rate

      1.

      8414 51 50

      Wall fans

      20%

      20%

      2.

      8529 90 30

      Open cell for television set

      15%

      0%

      3.

      8541 40 11

      Solar cells, not assembled

      20%

      0%

      4.

      8541 40 12

      Solar cells, assembled in modules or made up in panels

      20%

      0%

      *Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

       


      Full Text:

      Budget 2020-21 + FINANCE BILL, 2020

      Topics

      ActsIncome Tax