MUMBAI: The new Income Tax Bill has no changes in the rate structures, nor are there any changes in the capital gains tax rates. The Bill, which is likely to be tabled on Thursday, has 23 chapters, 536 clauses (instead of sections) and 16 schedules. The bill introduces the concept of tax year instead of assessment year, and previous year instead of financial year.
The Bill has 536 clauses instead of 298 sections under the current Income Tax Act.
Under the new proposed law, income not forming part of total income have now been moved to schedules to simplify the statute. Deductions from salaries such as standard deduction, gratuity, leave encashment etc, have now been tabulated at one place, instead of being scattered over different sections and rules. The bill proposes deductions for purchase of EVs, revises donation rules, and updates medical and education related deduction.
All the deductions have been put under chapter VIII from Clause 123 to clause 154.
It grants CBDT greater procedural powers to frame schemes and rules, similar to GST. The new proposed law bars civil courts from interfering in tax matters, ensuring direct tax administration authority.
The bill has a separate clause (Clause 194) which provides for taxation of earnings from lotteries, crossword puzzles, horse races, card games, online games, and income from the transfer of virtual digital assets.
Under the new bill, compliance & reporting mechanisms have been enhanced. Clause 509 requires detailed reporting of crypto transactions, clause 510 mandates Annual Information Statements (AIS) for better taxpayer transparency and clause 511 enforces international tax reporting for cross-border transactions.
According to Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, a quick look at the new bills demonstrates its comprehensiveness with 23 chapters divided into 536 sections and 16 schedules, over 600 pages, compared to the existing 298 sections and 14 schedules.
“The concepts of explanations and provisos seem to have been removed from the new version. New concepts such as tax year, instead of the previous year and assessment year, have been introduced. New sections covering revenue recognition for service contracts, provisions on allowability of MTM losses, valuation of inventory at lower of cost or net realisable value, which were sheltered under ICDS, have not been brought into the new bill itself,” adds Jhunjhunwala.
