New Income Tax Bill 2025 Extract of some provisions
- NEw Income tax Bill 2025 Click here to Download
The Income-tax Bill, 2025, classifies all incomes under five heads for the purposes of charge of income-tax and computation of total income
- Salaries [
- Income from house property
- Profits and gains of business or profession
- Capital gains
- Income from other sources
The Income Tax Bill, 2025 proposes several key changes. Here’s a summary in table format:
| Key Change | Clause(s) |
|---|---|
| Expanded Definition of Income: The bill broadens the definition of “income” to include various items like specific types of assistance received from the government, and sums received related to certain financial transactions. | 49 |
| Taxation of Business Trusts: Specific provisions are introduced for the taxation of income from business trusts, including Infrastructure Investment Trusts and Real Estate Investment Trusts. | 223 |
| Tonnage Tax Scheme: The bill outlines a tonnage tax scheme for income from the business of operating qualifying ships, providing an alternative to the regular income tax computation. | 225-235 |
| Faceless Procedures: The bill emphasizes faceless procedures for various interactions with income tax authorities, including assessments and collection of information, aiming to reduce direct contact between taxpayers and officials. | 245, 260 |
| Updated Return Filing: Provisions are made for filing updated returns, allowing taxpayers to correct errors or omissions in previously filed returns. | 266, 267 |
| Block Assessment in Search Cases: The bill details the procedure for block assessment of income pertaining to a specific period in cases involving search and seizure operations. | 292-301 |
| Special Provisions for Non-Profit Organizations: The bill introduces specific provisions for the registration and taxation of registered non-profit organizations, including the treatment of regular income, specified income, and violations. | 332-355 |
| Alternate Dispute Resolution: The bill includes provisions for alternate dispute resolution mechanisms, such as Dispute Resolution Committees and Advance Rulings, to facilitate faster and more efficient resolution of tax disputes. | 379-389 |
| Tax Deduction/Collection at Source (TDS/TCS): The bill elaborates on TDS and TCS provisions, including the responsibilities of deductors/collectors, and consequences of non-compliance. | 390-402 |
| Advance Tax Payment: The bill outlines the liability and computation of advance tax, as well as the consequences of defaults in payment. | 403-410 |
| Penalties and Offences: The bill specifies various penalties for non-compliance with different provisions, and also outlines offences and prosecution procedures for serious violations. | 439-498 |
| Miscellaneous Provisions: The bill includes various miscellaneous provisions related to service of notice, authentication of documents, and powers to make rules and remove difficulties. | 499-536 |
| New Tax Regime: Introduces a new tax regime for individuals, Hindu Undivided Families (HUFs), and others, along with specific tax rates for certain manufacturing domestic companies and cooperative societies. | 199-205 |
| Pass-Through Entities: Special provisions related to the taxation of income for pass-through entities like securitization trusts, venture capital undertakings, business trusts, and investment funds. | 221-224 |
| Foreign Company Residency: Defines when a foreign company can be considered a resident of India. | 220 |
| Taxpayer’s Charter: Introduction of a Taxpayer’s Charter. | 240 |
This table provides a concise overview of the significant changes proposed in the Income Tax Bill, 2025. It is important to refer to the full text of the bill for complete details and legal implications.
The Income Tax Bill, 2025 contains provisions for Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) which are mechanisms to collect income tax at the point of income generation. Here’s an explanation and a table summarizing some key aspects:
Rate in New Tax REgime
Clause 202 of the Income-tax Bill, 2025 outlines the income tax rates for certain individuals, Hindu undivided families, associations of persons, bodies of individuals, and artificial juridical persons. These rates are applicable unless the person chooses to exercise an option as provided in sub-section (4). The tax rates are as follows:
| Income | Tax Rate |
|---|---|
| Up to ₹ 4,00,000 | Nil |
| Between ₹ 4,00,001 and ₹ 8,00,000 | 5% |
| Between ₹ 8,00,001 and ₹ 12,00,000 | 10% |
| Between ₹ 12,00,001 and ₹ 16,00,000 | 15% |
| Between ₹ 16,00,001 and ₹ 20,00,000 | 20% |
| Between ₹ 20,00,001 and ₹ 24,00,000 | 25% |
| Above ₹ 24,00,000 | 30% |
It is important to note that the total income for the purposes of these rates is computed without any exemption or deduction under certain provisions, including those in Schedule III (Table: Sl. No. 5 or 6 or 7 or 8 or 11 or 17).
Tax Deduction at Source (TDS)
TDS is the process of deducting tax at the time of making certain specified payments. The person making the payment (deductor) is required to deduct a certain percentage of the payment and deposit it with the government. The person receiving the payment (deductee) gets credit for the tax deducted, which can be adjusted against their final tax liability.
Tax Collection at Source (TCS)
TCS is the process of collecting tax at the time of selling certain specified goods. The seller (collector) is required to collect a certain percentage of the sale amount as tax and deposit it with the government.
Here’s a table summarizing some TDS/TCS provisions with threshold limits and relevant clauses from the Income Tax Bill, 2025:
| Section/Clause | Type | Transaction | Threshold Limit | Rate | Notes |
|---|---|---|---|---|---|
| 392 | TDS | Salary and accumulated balance due to an employee. | As per applicable income tax slabs | As per applicable income tax slabs | The employer deducts TDS from the employee’s salary based on the employee’s income tax slab. |
| 393 | TDS | Tax to be deducted at source | Various thresholds as specified in the Finance Act | Specified in the Finance Act | Different rates apply to different types of payments, such as interest, commission, brokerage, professional fees, etc. The specific rates and thresholds are usually updated annually in the Finance Act. Refer to the finance act of the relevant year. |
| 394 | TCS | Collection of tax at source | Various thresholds as specified in the Finance Act | Specified in the Finance Act | TCS applies to the sale of certain goods, such as alcoholic liquor, timber, and minerals. The specific rates and thresholds are usually updated annually in the Finance Act. Refer to the finance act of the relevant year. |
Important Notes:
- The rates and threshold limits for TDS and TCS are subject to change as per the Finance Act of the relevant year. Always refer to the latest Finance Act for the most accurate and up-to-date information.
- The TDS/TCS provisions are complex and vary depending on the nature of the transaction and the parties involved. The table above provides a general overview, and it’s crucial to consult the detailed provisions of the Income Tax Act and relevant rules for specific situations.
- Failure to comply with TDS/TCS provisions can lead to penalties and other consequences.
| Sl. No. A | Nature of sum B | Amount of deduction C |
|---|---|---|
| 1. | Sum paid by the assessee as a tax on employment as per article 276(2) of the Constitution, leviable by or under any law. | Entire amount. |
| 2. | Standard deduction. | (a) 75,000 or the salary, whichever is less, where income-tax is computed under section 202(1); (b) 50,000 or the salary, whichever is less, in any other case. |
| 3. | Death-cum-retirement gratuity received as referred to in sub-section (2)(g). | Entire amount. |
| 4. | Payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services. | Entire amount. |
| 5. | Gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972). | Amount received, as restricted to the amount calculated as per the provisions of section 4(2) and (3) of that Act. |
| 6. | Any other gratuity received by an employee— (i) on his retirement; or (ii) on his becoming incapacitated before such retirement; or (iii) on termination of his employment. | Amount being minimum of— (a) actual gratuity received; (b) amount specified by the Central Government, by notification, having regard to the |
| A | B | C |
|---|---|---|
| (c) half month’s salary for each completed year of service, calculated as under:— Amount = 1⁄2 (A x B) where,— A = average salary for ten months immediately preceding the month when event occurs; B = number of such completed years. | ||
| 7. | Payment in commutation of pension received— (a) under the Civil Pensions (Commutation) Rules of the Central Government; or (b) under any similar scheme applicable to— (i) the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union, [such members or holders not covered under (a)]; (ii) the members of the all-India services; (30) (iii) the members of the defence services; (iv) the members of the civil services of a State, or the holders of civil posts under a State; or (35) (v) the employees of a local authority or a corporation established by a Central Act or State Act or Provincial Act. (40) | Entire amount. (15,20,25) |
| 8. | Payment in commutation of pension is received under any scheme from any other employer. | (a) If the employee has received gratuity, the commuted value of one-third of the pension, which he is normally entitled to receive; (45) (b) in any other case, the commuted value of one-half of such pension; |
| A | B | C |
|---|---|---|
| (c) such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality. | ||
| 9. | Payment in commutation of pension received from a fund as specified in Schedule VII (Table: Sl. No. 3). | Entire amount. |
| 10. | Compensation received by a workman at the time of his retrenchment— | Minimum of— (a) compensation received; (b) amount calculated as per provisions of section 25F(b) of the Industrial Disputes Act, 1947 (14 of 1947); (c) such amount, not being less than ₹ 50,000 as notified by the Central Government. |
| (a) under the Industrial Disputes Act, 1947 (14 of 1947); or | ||
| (b) under any other Act or rules, orders or notifications issued thereunder; or | ||
| (c) under any standing orders; or | ||
| (d) under any award, contract of service or otherwise. | ||
| 11. | Compensation received by a workman in accordance with any scheme which the Central Government may approve in this behalf, having regard to— | Compensation received. |
| (a) the need for extending special protection to the workmen in the undertaking to which such scheme applies; and | ||
| (b) other relevant circumstances. | ||
| 12. | Amount received or receivable on voluntary retirement or termination of service under a scheme or schemes of voluntary retirement, by an employee as referred to in sub-section (2)(h). | Minimum of— (a) compensation received; and (b) ₹ 5,00,000. |
| 13. | Payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise. | Entire amount. |
| A | B | C |
|---|---|---|
| 14. | Payment of the nature referred against serial number 13 received by an employee who is not a Central Government or State Government employee. | Amount being minimum of (a) the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise (entitlement of earned leave shall not exceed thirty days for every year of actual service); |
| (b) amount “A”, where,— A = 10 × B; B = average monthly salary for the ten months immediately preceding his retirement whether on superannuation or otherwise; | ||
| (c) amount as the Central Government may, by notification, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government; and (d) actual payment received. | ||
| (2) For the purposes of the Table referred to in sub-section (1),— (a) in respect of the entries against serial number 6 thereof, if gratuity or gratuities was or were received from one or more than one employer in the same tax year (whether or not any gratuity or gratuities was or were received in any earlier tax year), the aggregate amount of deduction shall not exceed— A – B, where,— A = the limit specified by the Central Government, by notification; and B = the aggregate amount of gratuity or gratuities which was or were received in any one or more earlier tax years and allowed as an exemption or a deduction (whether whole or part) from the total income of any such tax year or years; |