The Income Tax Bill 2025 introduces significant changes to cash transaction limits in India. This video provides a comprehensive overview of the new rules, covering:

• Restrictions on cash receipts (₹2 lakh limit)
• Limits on cash expenses for businesses (₹10,000/₹35,000)
• Rules for accepting and repaying loans in cash (₹20,000 limit)  
• TDS on cash withdrawals (₹1 crore/₹3 crore)
• Regulations for cash donations
• Impact on depreciation of assets purchased in cash
• And much more!

New Cash Transaction Limits Under the Income Tax Act 2025 : The Income Tax Bill 2025 introduces various restrictions on cash transactions to promote digital payments and curb tax evasion. The relevant provisions are covered under Clause 36, Clause 186, Clause 185, and Clause 188.

1. Restrictions on Receiving Cash (Clause 186)

Here’s a table summarizing the penalties for violating section 186 of the Income-tax Bill 2025, as well as other key aspects of the clause:

• Penalty for violation: An amount equal to the sum received in cash may be levied as a penalty under Clause 446.
• “specified sum” means any sum of money receivable, whether as  advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place;

2. Restrictions on Acceptance of Cash Loan / Mode of taking or accepting
certain loans, deposits and specified sum.

Here is a breakdown of cash transaction limits according to Clause 185 of the Income Tax Bill 2025, in tabular form:

Meaning : “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place; Clause 189(c)

Penalty : If a person takes or accepts any loan or deposit or specified sum in  contravention of the provisions of section 185, the Assessing Officer may impose on him, a penalty equal to the amount of the loan or deposit or specified sum so
taken or accepted. (clause 450)

In summary, according to Clause 185(1) read with clause 185(1)(iii) of the Income Tax Bill 2025, any person cannot accept a loan, deposit, or specified sum of ₹20,000 or more in cash. The transaction needs to happen through account payee cheque, account payee bank draft, electronic clearing system, or other prescribed electronic means [185(1), 185(1)(iii)].

3. Restrictions on Cash Payments for Business Expenses (Clause 36)

Here’s a summary in tabular form of the treatment of business expenses exceeding ₹10,000 (or ₹35,000 for specific cases) paid in cash, according to the Income-tax Bill 2025 and our conversation history:

• Note : If a business incurs an expense exceeding ₹10,000 in cash per day, the expense will be disallowed from deductions while calculating taxable income.

3.Repayment of  certain loans or deposits.

Clause 188 of the Income-tax Bill 2025, along with the penalty for its violation

Note : “specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.

4. Cash Withdrawal Limits & TDS (Clause 393 Table)

4.Depreciation not Allowed if Asset over Rs 10000 Purchased in Cash

Exclusion from actual cost:  The payment or aggregate of payments exceeding ten thousand rupees in
a day for acquisition of an asset, made to a person in a mode otherwise than by specified banking or online mode, shall be excluded from the actual cost of the asset.  (clause 39)

“Specified Banking or Online Mode” shall mean transaction by  an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode, as prescribed; [ Clause 66(36)]

5. Other New Cash Transaction Limits Under the Income Tax Act 2025

Note

• The donation must be made as a sum of money.
• The term “charitable purpose” does not include any purpose that is wholly or substantially of a religious nature.
• To claim the deduction, the assessee’s return of income filed for any tax year must include information about the donation furnished by the institution or fund to the prescribed authority. This claim is subject to verification as per the risk management strategy formulated by the Board.

Key Takeaways for New Cash Transaction Limits Under the Income Tax Act 2025

1. Cash receipts of ₹2 lakh or more in a single transaction are prohibited.
2. Cash expenses exceeding ₹10,000 per day per person will be disallowed.
3. Loan repayments of ₹20,000 or more in cash are not allowed.
4. TDS at 2% is applicable on cash withdrawals exceeding ₹1 crore (₹3 crore for co-op societies).
5. Donations exceeding ₹2,000 must be made through digital modes.

Refer following for New Cash Transaction Limits Under the Income Tax Act 2025

• Key FAQs on the Income Tax Bill 2025
• New Income Tax Act 2025: update : Tabled In parliament on 13th Feb 2025
• Income-tax Bill, 2025 ​[!New]

Tax Audit in New Income Tax Act 2025 : The Income-tax Bill, 2025 outlines specific time limits for completing a tax audit, which are connected to the financial year. The concept of a “tax year” is introduced in the new bill, and is tied to the financial year.

Here are the relevant details regarding tax audit time limits as specified in the Income-tax Bill, 2025, presented in a table format for clarity:

As per the Income Tax Bill 2025, the following persons are required to have a tax audit under Section 63:

Persons Required to Do Tax Audit in New Income Tax Act 2025

1. Businesses and Professions Based on Turnover/Gross Receipts

Any person carrying on a business or profession fulfilling the following conditions must get their accounts audited:

2. Presumptive Taxation Cases (Lower Profit Declaration)

A tax audit is also required if an assessee:

• Declares profits lower than those deemed under presumptive taxation schemes as per Section 58(2) or Section 61(2) (except for cases in Section 61(2) [Table: Sl. No. 6]).

Tax Audit Requirements in case of Presumtive Scheme

Table: Special Provisions under Clause 58(2)

3. Exemptions from Tax Audit

A tax audit is NOT required if:

• The profits and gains of a business or profession are declared under Section 58(2).
• The assessee falls under Section 61(2) [Table: Sl. No. 6], with specific income types exempted from tax audit.

4. Additional Compliance for Audit

• The tax audit report must be furnished one month before the due date for filing the return of income under Section 263(1).
• If a person is already required to get their accounts audited under any other law, the tax audit requirement will be considered fulfilled if:
  • The audit is conducted before the specified date; and
  • The audit report is submitted along with the income tax return

Meaning of Turnover for Tax Audit under the Income Tax Bill 2025

The term “turnover” for tax audit purposes is not explicitly defined in the Income Tax Bill 2025, but it clause 63 of the bill refers total sales, turnover or gross receipts from business or profession during the tax year .

Tax Year Concept in New Income Tax Act 2025 Explained

When Tax Audit Should be Conducted

Key Points:

• The “specified date” for the audit report is defined as one month prior to the due date for furnishing the return of income under section 263(1). The due date for furnishing the return of income depends on the category of assessee.
• Section 63 specifies that a tax audit is required if a person carrying on business or profession exceeds certain thresholds in terms of turnover/receipts. It is also required if the accounts are required to be audited under any other law.
• Clause 263 of the Income-tax Bill, 2025 outlines the obligation of persons to file a return of income.
• For a company, the due date for filing the return of income is the 31st of October of the financial year succeeding the relevant tax year.
• For a person, other than a company, whose accounts are required to be audited, the due date for filing the return of income is also the 31st of October of the financial year succeeding the relevant tax year.
• The Income Tax Bill 2025 defines a tax year as a period of twelve months within the financial year starting on April 1. For a new business or a new source of income, it will start from the date of set up or the source and end with the financial year.
• The requirement for a tax audit is based on the person’s income and business activities during the tax year. However, the deadlines are defined by their connection to the financial year.
• The audit report is to be furnished by the assessee to the Assessing Officer within such period as specified by the Assessing Officer. The Assessing Officer may extend the period for any good and sufficient reason.

It is important to note that while the tax year is the unit period of taxation, the financial year remains relevant for setting the timelines for compliance and other procedural matters, including those related to tax audits.

Due Dates for Filing Income Tax Return (ITR) as per Income Tax Bill 2025

Additional Provisions

1. Late Filing of Return: If a person fails to file their ITR within the due date, they may still file a belated return within 9 months from the end of the tax year or before the completion of assessment, whichever is earlier.
2. Revised Return: If a person finds errors in a filed return, they may revise it within 9 months from the end of the tax year or before the completion of assessment, whichever is earlier.
3. Updated Return: A person may file an updated return within 48 months from the end of the financial year succeeding the tax year in certain cases.

These dates apply as per Section 263 of the Income Tax Bill 2025​.

Due Dates for Tax Audit and ITR Filing Income Tax Bill 2025​.

Penalty for Failure to Get Accounts Audited (Clause 446)

If any person fails to get their accounts audited for any tax year or fails to furnish the audit report as required under Section 63, the Assessing Officer may impose a penalty, which shall be the lesser of:

1. 0.5% of the total sales, turnover, or gross receipts in business, or the gross receipts in profession for such tax year; or
2. ₹1,50,000 (One Lakh Fifty Thousand Rupees).

This penalty applies to all taxpayers who are mandated to conduct a tax audit under Section 63 but fail to do so​

Here is a comparison between Clause 446 of the Income Tax Bill 2025 and Section 271B of the Income Tax Act, 1961 (as amended by FA 2024):

Possible Relief from Tax Audit Penalty  in New Income Tax Act 2025

 Clause 470 of the Income Tax Bill 2025 provides that a penalty shall not be imposed if there is a reasonable cause for non-compliance.

Thus, if a taxpayer can prove reasonable cause, the tax authorities may decide not to impose the penalty for tax audit non-compliance.

Comparison of Tax Audit Penalty Provisions

Key Observations

• No Change in Penalty Amount: The maximum penalty remains ₹1,50,000, and the rate remains 0.5% of turnover or gross receipts.
• Structural Change: The provisions have been renumbered (from Section 271B in the Income Tax Act, 1961 to Clause 446 in the Income Tax Bill, 2025).
• Applicability and Sections Changed: The new law applies under Section 63, whereas the older law applied under Section 44AB.

Conclusion

The substance of the penalty provision remains unchanged in the new law, but it has been restructured and renumbered to align with the revised framework of the Income Tax Bill 2025.

Who Can Conduct a Tax Audit Under the Income Tax Bill 2025?

As per Section 515(3)(b) of the Income Tax Bill 2025, a tax audit must be conducted by an “Accountant.”

Definition of Accountant (Section 515(3)(b))

An “Accountant” means:

1. A Chartered Accountant (CA) as defined under Section 2(1)(b) of the Chartered Accountants Act, 1949, who holds a valid Certificate of Practice (COP) under Section 6(1) of the Chartered Accountants Act, 1949.
2. Exclusions: The following persons cannot be considered as an “Accountant” for tax audit purposes:
   • For a Company: A person not eligible for appointment as an auditor under Section 141(3) of the Companies Act, 2013.
   • For Other Assessees:
     • The assessee himself (including partners or members of an HUF, AOP, or firm).
     • A trustee or office bearer of a trust or institution.
     • Any relative of the assessee.
     • An officer or employee of the assessee.
     • A person who has a financial interest (holding securities, being indebted, or providing guarantees) beyond prescribed limits.
     • A person who has a business relationship with the assessee.
     • A person convicted of fraud or penalized under tax laws.

Conclusion

Only a practicing Chartered Accountant (CA) with a valid Certificate of Practice (COP) can conduct a tax audit under Clause 63, subject to the restrictions mentioned above.

Comparison of the Definition of “Accountant” in the Income Tax Act, 1961 (Section 288) and the Income Tax Bill 2025 (Section 515(3)(b))

Key Differences & Observations

1. Definition of “Accountant” Remains the Same
   • Both laws define an accountant as a Chartered Accountant (CA) holding a valid Certificate of Practice.
2. Exclusions Remain the Same
   • The same restrictions apply to persons who cannot act as an accountant, including partners, employees, relatives, and persons with financial interests in the assessee.

Conclusion

• Practically, Chartered Accountants (CAs) remain the only professionals authorized to conduct tax audits under both the existing law and the new law.

Key Changes in Tax Audit Provisions: Income Tax Bill 2025 vs. Income Tax Act 1961

The Income Tax Bill 2025 (Clause 63) introduces certain modifications in tax audit provisions compared to Section 44AB of the Income Tax Act, 1961. Below is a comparative analysis:

1. Turnover Limit for Tax Audit

No major change in turnover limits, but the applicable section numbers have been renumbered.

2. Due Date for Filing Tax Audit Report

No change in the timeline for submission of the audit report.

3. Compliance with Other Laws

No change in the rule allowing tax audits conducted under other laws to fulfill tax audit requirements.

4. Exemptions from Tax Audit

Renumbering of sections, but no major change in exemptions.

5. Who Can Conduct a Tax Audit?

No change in eligibility rules for tax auditors.

6. Penalty for Non-Compliance with Tax Audit

No change in the penalty structure, but the waiver provision is now under Clause 470 instead of Section 273B.

7. Additional Changes

No major changes except renumbering of sections.

Conclusion: What Has Changed?

1. No Major Structural Changes
   • Tax audit applicability, turnover limits, penalties, and exemptions remain the same.
   • The provisions have only been renumbered, making it easier to follow under the new law.
2. Renumbering of Sections
   • Section 44AB → Clause 63
   • Section 271B (Penalty for non-compliance) → Clause 446
   • Section 273B (Penalty waiver) → Clause 470
3. Reporting and Compliance Requirements Remain the Same
   • The due date for tax audit report filing remains one month before the ITR due date.
   • Tax audits under other laws (e.g., Companies Act) will still be accepted.
4. Penalty Waiver Provision Shifted to Clause 470
   • Previously under Section 273B, now under Clause 470.

Final Verdict

Minimal changes in tax audit provisions in the new Income Tax Bill 2025—mostly renumbering and simplifications.

Download FAQs and section wise compariosn of new income tax bill 2025

The document provided is a comprehensive overview of the proposed Income Tax Bill 2025, including comparisons to the Income Tax Act, 1961. It outlines the goals of the new bill, the simplification efforts undertaken, and specific changes across various sections of the tax code. Here are the key points:

Overall Goals and Approach:

• The primary goal of the new Income Tax Bill is to create a tax law that is concise, lucid, and easy to understand.
• The bill aims to reduce the length of the existing act by nearly half by eliminating redundant provisions.
• It introduces a more straightforward drafting style and incorporates over 57 tables compared to the 18 in the 1961 Act.
• The new bill aims to minimize cross-references and conflict, aggregating applicable provisions related to a single scenario in one place.
• Provisos and explanations have been removed and replaced with sub-sections and clauses for clarity.
• The bill also seeks to reduce the scope of litigation and fresh interpretations.
• The new bill has been drafted with simpler language, reducing traditional legal jargon.

Key Changes and Simplifications:

• Definitions: The new bill simplifies language in definitions, maintains alphabetical order, and consolidates terms defined in multiple places.
• Tax Year: The term “tax year” replaces “previous year” and “assessment year,” aligning the tax period with a 12-month period contained within a financial year.
• Charging Section: The charging section has been simplified into smaller and simpler sentences.
• Non-Profit Organizations (NPOs): Provisions related to NPOs have been consolidated into a single part of the bill, using the term “registered non-profit organization” and “registration” to avoid confusion. Redundant provisions were removed and some provisions were tabulated for easier understanding.
• Exemptions: Exemptions for specific incomes and persons are moved to separate schedules for easier reference and simpler compliance. Section 10 of the Income Tax Act, 1961, with its numerous clauses and provisos, has been restructured into schedules with tables.
• Salary and House Property: All provisions related to salary are consolidated in one place, and the language has been simplified to improve readability. Deductions, like gratuity and leave encashment, are now part of the salary chapter. Similarly, changes to provisions related to house property are minimal since those are considered to be already simple.
• Profits and Gains of Business or Profession: The flow of sections has been revised for better coherence. Similar sections, such as those on presumptive taxation, have been merged, and provisions on employee welfare have been grouped together. Formula-based explanations have been added and provisions involving multiple scenarios have been organized into tables.
• Deeming Provisions: These provisions have been simplified and made more certain, with the rate of taxation specified in the chapter itself.
• Set-off and Carry-forward of Loss: The bill includes amendments from Budget 2025 pertaining to capping carry forward loss. Redundant sections like 71A and 75 have been removed.
• Chapter VIA Deductions: Existing provisos and explanations have been integrated into the main sections and complex sections like 80C have been simplified and moved to Schedule XV. Sections 80TTA and 80TTB have been merged.
• Advance Tax, Refunds, and Interest: Formulas are provided for the computation of advance tax liability and interest in different situations. Tables are used to clarify start and end dates for interest computation.
• Tax Rates: The new tax regime is now a separate part of the bill dedicated to special rates of taxation. Tables have been introduced to list special types of income attracting special rates under the act.
• Tax Treaties: The bill clarifies India’s tax treaty position concerning the interpretation of terms.
• Tax Administration: The four parts under Income Tax Authorities in the 1961 Act have been merged to create only two parts in the new bill.
• Assessment Procedure: The sections providing limitation for making assessments and reassessments have been converted into tabular format for ease of readability. Sections relating to faceless assessment have been simplified and consolidated.
• Return of Income: All assessees required to file returns of income are consolidated into one place in the bill. Exempt entities are also still required to file returns if their income exceeds the maximum not chargeable to income tax.
• Tax Deduction and Collection at Source (TDS/TCS): The bill merges the numerous TDS sections into one section with three tables for residents, non-residents, and any person. A separate table provides for cases where TDS is not required. Provisions relating to TCS have also been merged into a single section. Furthermore, provisions relating to Certificates, Compliance, and Consequences of failure have also been merged and placed as independent sections.

Reduction in Size and Complexity:

• The new bill reduces the number of chapters from 47 to 23 and sections from 819 to 536.
• The bill has reduced the number of words from 5.12 lakhs to 2.60 lakhs.
• The simplification has also removed approximately 1200 provisos and 900 explanations.
• The provisions related to NPOs have been reduced from 12,800 to 7,600 words.
• The word count for exemption related provisions has been reduced from approximately 30,000 to 13,500.
• The word count for TDS/TCS has been reduced from 27,453 to 14,606.
• The number of sections in the chapter on ‘Profits and gains of business and profession’ has decreased from 65 to 41, while the word count has been reduced by more than half.

Implementation:

• After the bill is passed by Parliament, new rules and forms will be notified.
• Software development will be undertaken to establish systems and processes for administrative functions.
• The new bill includes a repeal and savings clause to safeguard rights and liabilities under the old law.

In summary, the proposed Income Tax Bill 2025 represents a significant effort to simplify and modernize India’s tax code. It aims to reduce complexity, enhance clarity, and improve compliance through a variety of changes, including the elimination of redundant provisions, the use of tables, and the consolidation of related sections.