Curated commentaries and expert insights on selected statutory provisions,
case laws, and legal developments, offering practical interpretation and context.
Aimed at helping users understand the “why” behind the law, these notes add value beyond the bare text.
Act Rules
Income Tax
Comparison of section 336 "Taxable Regular income." between the Income-Tax Act, 2025 (as passed) and...
Act Rules
Income Tax
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Section 335 changes income heads for registered non-profit organisations, altering receipts, property returns and commercial gains treatment
Two versions of section 335 define a registered non-profit organisation's "regular income" with four heads-charitable activity receipts, returns from property/investments, voluntary contributions, and gains from commercial activities-but differ materially: the Bill used "receipts" and expressly included "capital or revenue" property returns, while the enacted Act uses broader "income," separates wholly- and part-held property/deposits, omits the "capital or revenue" phrasing, and reframes commercial gains as those permissible under sections 344-346 (with a new cross-reference to section 332(2)(b)(ii)). These drafting changes shift recognition scope, allocation issues and compliance uncertainty pending related section text and prescribed computation rules.
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Income Tax
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Section 332 preserves nonprofit registration rights, clarifies provisional timelines, trust asset rules, tax on accreted income, and extended validity
Section 332 preserves eligibility for registration of non-profit entities subject to charitable/public religious purposes and assets held in irrevocable trust, discretionary condonation of delay, tax on accreted income for uncured delays, and extended ten-year validity for lower-income applicants. Key Act vs Bill changes: the Act shortens provisional-registration decision time from three months to one, narrows the trigger for object-change filings to modifications that do not conform to registration conditions, omits the Bill's explicit "or both" phrasing (charitable and religious), replaces a narrower cross-reference with a broader procedural phrase, and directs enquiries to satisfy genuineness first and compliance only as material, largely narrowing administrative scope.
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Income Tax
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Section 327: Firm assessments under sections 270/271 apply to firm as constituted when assessment is made; change in constitution defined
Section 327 mandates that assessments under sections 270/271 be made on the firm as constituted at the time the assessment is made; "change in constitution" covers partners ceasing to be partners, admission of new partners provided at least one pre-existing partner remains, and changes in partners' shares, with a proviso excluding dissolution on a partner's death. The Bill and Act texts are substantively aligned; the Act consolidates cessation and admission into a single subparagraph while the Bill lists them separately, a drafting difference without apparent change in scope. The provision is silent on timing definitions, successor liability, and procedural implementation.
Act Rules
Income Tax
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Section 324's broader wording allows tax rates from various central statutes, creating uncertainty versus Finance Act anchoring
Section 324 in the Act charges tax on a firm's total income at the rate "as specified in any Central Act" whereas the Bill originally tied the rate specifically to "the Finance Act of the relevant year." The Act's broader wording potentially permits rates set by multiple central statutes, increasing the need to survey other enactments and creating interpretive uncertainty; the Bill's wording offers clearer administrative practice by anchoring rates to the annual Finance Act. The documents do not state legislative intent, transitional rules, or whether administrative guidance will resolve any ambiguity.
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Income Tax
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Section 323 makes private company directors jointly and severally liable for unrecoverable company taxes unless they prove no gross neglect
Section 323 imposes joint and several personal liability on directors of private companies for tax (including penalties, interest and fees) unrecoverable from the company, operating irrespective of the Companies Act and placing on directors the burden to prove non-recovery was not due to their gross neglect, misfeasance or breach of duty. The Bill originally included a narrow saving exempting directors on conversion to a public company for tax years commencing before 1 April 1961; that saving was omitted in the enacted Act, thereby broadening director exposure. No procedural details, legislative history or effective date are provided.
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Income Tax
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Section 311: Taxing AOP/BOI Income at Highest Marginal Rate When Members' Shares Are Indeterminate, With Higher Personal Rates Applied
Section 311 prescribes taxing an AOP/BOI's total income at the maximum marginal rate when members' shares are indeterminate, except that if any member's personal tax rate exceeds that maximum, the higher rate applies; where shares are determinate, income portions attributable to higher-rate members are taxed at their rates and the balance at the maximum marginal rate. A deeming rule treats indeterminacy at formation or later as sufficient. The Bill and the Act are substantively aligned; differences are drafting and ordering, with the Bill slightly clearer in tying the exempt threshold to the Finance Act.
Act Rules
Income Tax
Comparison of section 308 "Charge of tax in case of oral trust." between the Income-Tax Act, 2025 (a...
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Income Tax
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Clause 307: income held by representatives taxed at top marginal rate unless narrow exceptions allow association-of-persons rates
Clause 307 treats income held by representative assesses as taxable at the maximum marginal rate where beneficiary identities or shares are unspecified or indeterminate, subject to narrow exceptions permitting association-of-persons rates (limited beneficiary economic circumstances, a sole testamentary trust, bona fide pre-1 March 1970 non-testamentary trusts for dependants, and bona fide employee funds). The Bill added a prefatory "subject to the other provisions of this section," absent in the enacted Act, and the Act includes a corrigendum narrowing application of the top rate to "such income or part thereof" for business profits, clarifying but not substantively altering the provision.
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Income Tax
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Enacted provision preserves representative assessee's recovery rights, adds AO certificate cap "at the time of final settlement" sub-section (4)
The enacted provision preserves a representative assessee's statutory right to recover tax paid on another's behalf or to retain equivalent funds, and to retain estimated liability amounts; it adds a mechanism for obtaining an Assessing Officer's certificate to authorize retention and limits recoverability to the certificate amount except for additional principal assets. Compared with the original Bill, the enacted text inserts the temporal qualifier "at the time of final settlement" to sub-section (4), narrowing the certificate-based cap to settlement time, and contains a likely typographical cross-reference error in sub-section (2) referencing a different section number without changing substantive effect.
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Representative assessee treated as beneficial owner for assessment; exclusivity, recovery from beneficial owner, limited deeming to assessment
The provision treats a representative assessee as liable for income as if beneficially owned, permitting assessment in the representative's name, imposing exclusivity against other assessments, and authorizing recovery or direct assessment from the underlying beneficial owner; it prescribes a pro rata formula where only part of a trust's income is chargeable and grants the tax authority equivalent remedies against property under the representative's control. The enacted text narrows earlier bill language by limiting the deeming clause to "assessment" (omitting "any other proceedings"), creating potential procedural uncertainty over whether non-assessment actions must be brought in the representative's name.
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Income Tax
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Section 301 defines block period and broad 'undisclosed income' scope for search and requisition proceedings, merging prior definitions
Section 301 defines terms for special procedures in search and requisition cases, framing a "block period" (six tax years before the year of search/requisition plus from 1 April of that year to the date of the last authorisation), when "undisclosed income"-including money, bullion, jewellery, virtual digital assets, expenditures, entries or transactions and incorrect claims of deductions/exemptions-may be examined. The primary drafting differences: the enacted Act relocates the provision to apply "for the purposes of this Part," omits separate labels for "seized" and "requisitioned" items, and merges the two limbs of the undisclosed-income definition, altering textual clarity but not apparent substantive scope.
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Income Tax
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Section 298: 1.5% Monthly Interest, 50% Penalty on Undisclosed Income with Hearing, Senior Approval and Limits
Section 298 imposes 1.5% monthly interest on tax determined in search assessments and a 50% administrative penalty on tax leviable for undisclosed income where a return called under section 294(1)(a) is not furnished; it exempts penalty for the block period if a return is filed, tax paid with proof and no appeal is filed, but permits penalty on any excess undisclosed income. The Act narrows the return wording to "return of undisclosed income" (from "total income"), changes an internal cross-reference ("Chapter" to "Part") and substitutes section 453 for 452, and adds procedural safeguards: hearing, senior approval for penalties over Rs.200,000, and specified limitation exclusions and extensions.
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Act moves time limit from month-end to quarter-end, extends search/requisition deadlines, adds 13-month reading and clearer seizure rules
The Bill fixed a 12-month limit from the end of the month of the last search authorisation or requisition with specified exclusions, a 12-month extension for references, up to 180 days exclusion for custody of seized items, minimum 60-day post-exclusion protection and month-end rounding; the enacted Act shifts the anchor to the end of the quarter (often adding up to three months), adds a 13-month reading where return-filing is extended, cross-references definitions of seized items, refines exclusion wording and receipt triggers, and otherwise preserves similar extensions and minimum-period protections, thereby giving authorities more time and greater drafting specificity.
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Income Tax
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Statute requires transferring seized materials to assessing officer for other person and mandates block-assessment and fixed abatement date
Where an AO seizes money, assets, documents or information in a search and is satisfied the undisclosed income pertains to a person other than the searched person, the statute mandates handing those materials to the AO having jurisdiction over that other person and requires that person be assessed under the block-assessment provisions. The enacted text broadens coverage to "any other material or information," replaces "Chapter" with "Part," adds subsections fixing the block period for the other person and treating the date the AO receives the materials as the relevant date for abatement, and cross-references specific search provisions, reducing temporal uncertainty and clarifying procedural duties.
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Enacted provision narrows special return to undisclosed income for period, adds 30-day extension with four conditions; corrects section 263 reference
The enacted section narrows the special return to undisclosed income for the block period, adds an express 30-day extension subject to four conditions, corrects the late-return cross-reference to section 263, and substitutes applicability of sections 277 and 278 for the Bill's 287 and 288; the Bill had required total income disclosure, lacked the extension, referenced section 259, and included an explicit rule aligning block periods in consequential assessments under section 295. Both versions bar revision, require senior approval before issuing the notice, and trigger a special expedited block assessment regime after searches/requisitions.
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New law narrows block assessment to "total undisclosed income", expands exclusions, formalises AO recomputation power, clarifies assessment routes
The enacted provision narrows and reorganises the original bill's approach by recasting the block-period base as "total undisclosed income" rather than broader "total income," limiting the taxable base to declared undisclosed amounts and AO-determined undisclosed income while moving many previously listed items into explicit exclusions. The Act expands and clarifies exclusion categories (including specified incomes and temporal book-based rules), formalises AO power to recompute partly undisclosed book entries, retains but phrases differently the prohibition on setting off brought-forward losses against undisclosed income and allows carry-forward, and expressly directs certain international/specified domestic transactions out of block assessment into ordinary assessment routes. Practical effect: narrower block scope and clearer exclusion/assessment pathways.
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Income Tax
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Enacted law narrows block-assessment to "total undisclosed income", limits scope and revival, mandates consolidated abatement and three-month search gap
The enacted provision narrows the Bill's block-assessment regime by focusing on "total undisclosed income" rather than "total income," and by referring to "this Part" instead of "this Chapter," affecting cross-references and scope. Both versions compel consolidated assessment and abatement of concurrent year-wise proceedings on search or requisition, provide sequential handling for multiple searches with a minimum three-month window, and allow revival of abated proceedings if block proceedings are annulled; the enacted text, however, ties revival and abatement mechanics more narrowly to specific sections, refines deeming language for notices issued during the search period, and limits the non-obstante sweep compared with the Bill.
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Income Tax
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Omission of Section 111(2) narrows mandatory notice duty for assessed losses, risking unclear carry-forward and set-off outcomes
The provision imposes a mandatory duty on the Assessing Officer to issue a written order notifying the assessee of the amount of loss computed when a loss is established in assessment and is eligible for carry-forward and set-off under the specified sections. The Bill expressly referenced both sub-sections 111(1) and 111(2), whereas the enacted Act text omits 111(2), narrowing the enumerated purposes for notification; this omission may reduce statutory clarity and could materially affect losses that fall solely within the omitted sub-section. Procedural details, timelines and remedies are not specified.
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Income Tax
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Clause 288 limits tax authority to amend completed assessments to listed triggers with four-year limits and three-month TP exception
Clause 288 authorises the tax authority to amend completed assessments only in specified circumstances (reassessments, recomputations, valuation revisions, patent revocation, foreign tax settlements, TDS allocation, transfer-pricing determinations), with limitation periods tied to concrete triggering events-generally four years reckoned from end of the (financial) year in which the triggering order occurs. Transfer-pricing recomputations have a separate three-month window and are excepted from the four-year bar. Material differences between the introduced Bill and the enacted Act include subsection cross-references (notably a change in the cited subclause of section 35), "year" versus "financial year" wording and repositioning of the TP provision, affecting timing and interpretive clarity.