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📢 Preliminary Analysis: Income Tax Bill, 2025 As reviewed by the Lok Sabha Select Committee — Key recommendations and clarifications across 30+ clauses.
- Sumit ved
- Jul 22, 2025
- 2 min read
Legal & Tax Update | Professional Summary
Ongoing reforms with practical impact for professionals, taxpayers, and institutions.
📍Disclaimer: This is a preliminary analysis based on the review draft presented before the Lok Sabha Select Committee. Final provisions are subject to Parliamentary approval and Gazette notification. This is for informational purposes only and not a substitute for professional advice.
🔍 Key Clause-Wise Takeaways from the Select Committee Review:
Clause 2(22): Capital Asset definition aligned with Finance Act, 2025 to ensure consistency for FII and fund provisions.
Clause 2(55): “Infrastructure capital company” redefined; avoids reliance on repealed 1961 Act.
Clause 22: 30% house property deduction post municipal tax; let-out properties eligible for pre-construction interest deduction.
Clause 37(1): Only “otherwise allowable” expenses to be claimed on actual payment basis.
Clauses 45(2)(c) & 45(3): Scientific research deductions refined to reduce ambiguity and clarify approval requirements.
Clause 66: Uniformity brought by mirroring MSMED Act, 2006 for “Micro” and “Small” definitions.
Clause 71(1)(b): “Parent Company” precisely defined to avoid structural ambiguity.
Clause 79(1): Capital gain reference to Clause 72 reinstated for clarity.
Clause 119: Loss carry-forward allowed if 51% shareholding restored later; “beneficial owner” clarified.
Clause 124(3): Clarity in pension deduction by inserting “by such individual.”
Clause 133(2): Donation deduction cap to be based on adjusted gross total income to prevent inflated claims.
Clause 145(1)(b): Term “other” reinserted to protect biodegradable waste deductions.
Clause 156(2)(b): Rebate clause redrafted to prevent tax distortion near ₹12 lakh income.
Clause 181: GAAR phrase “in the circumstances of the case” restored for balanced application.
Clause 187(a): Mandatory e-payment mode extended to “Profession” (beyond “Business”) if receipts > ₹50 crore.
Clause 189: Definition of “co-operative bank” added for consistency across multiple clauses.
Clause 246(2)(b): Inquiry powers to include jurisdictional checks (like Section 131(1A)).
Clause 263(1)(ix): Mandatory ITR filing for refund removed—relief for low-income/TDS-only cases.
Clause 270(1)(a)(v): Late ITR filing restriction limited to Chapter VIII Heading C deductions.
Clause 332: “Wholly for charitable or religious purposes” clarified to address mixed-objective NPOs.
Clause 335: “Receipts” replaced with “income” for NPOs—ensuring net taxation principle.
Clause 337: Charitable-religious trusts exempted from 30% anonymous donation tax (restoring Section 115BBC parity).
Clause 341: Deemed application of income revived to benefit NPOs with delayed income.
Clause 357: Appellant “status” definition aligned with Clause 356 for clarity in CIT(A) appeals.
Clause 383(2): Advance ruling fee delinked from fixed ₹10,000—now rule-based.
Clause 392(7)(a): Omitted “non obstante” clause restored to clarify PF-related TDS rates.
Clause 395: “Nil” reintroduced for TDS certificates—administrative clarity enhanced.
Clause 432(1): Refund entitlement clarified for clubbed income assessees.
Clause 441: Penalty for not maintaining books made discretionary (“may” instead of “shall”).
Clause 505: Liaison offices of non-residents get extended 8-month window for compliance.
Clause 514: Registered Valuer (RV) qualification to be legislated in Act—post-Companies Act review.
✅ Professionals, CFOs, Startups, NPOs, and Tax Advisers should closely track the developments.
📌 Stay updated as the Bill progresses through Parliament and subsequent rules are framed.
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