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BILL No. 3 OF 2026
THE FINANCE BILL, 2026
(AS INTRODUCED IN LOK SABHA)
THE FINANCE BILL, 2026
_______
ARRANGEMENT OF CLAUSES
______
CHAPTER I
PRELIMINARY
CLAUSES
1.
Short title and commencement.
CHAPTER II
RATES OF INCOME-TAX
2.
Income-tax under Act 43 of 1961.
3.
Income-tax under Act 30 of 2025.
CHAPTER III
DIRECT TAXES
A.––Income-tax under the Income-tax Act, 1961
4.
Amendment of section 92CA.
5.
Amendment of section 139.
6.
Amendment of section 140B.
7.
Amendment of section 144C.
8.
Insertion of new section 147A.
9.
Amendment of section 153.
10. Amendment of section 153B.
11. Amendment of section 220.
12. Insertion of new section 234-I .
13. Amendment of section 245MA.
14. Amendment of section 270A.
15. Amendment of section 270AA.
16. Amendment of section 274.
17. Amendment of section 275A.
18. Amendment of section 275B.
19. Amendment of section 276.
20. Substitution of new sections for sections 276B, 276BB, 276C, 276CC, 276CCC and
276D.
ii
CLAUSES
21. Amendment of section 277.
22. Amendment of section 277A.
23. Amendment of section 278.
24. Amendment of section 278A.
25. Amendment of section 280.
26. Insertion of new section 292BA.
B.––Income-tax under the Income-tax Act, 2025
27. Amendment of section 2.
28. Amendment of section 7.
29. Amendment of section 21.
30. Amendment of section 22.
31. Amendment of section 29.
32. Amendment of section 58.
33. Amendment of section 66.
34. Amendment of section 69.
35. Amendment of section 70.
36. Amendment of section 93.
37. Amendment of section 99.
38. Amendment of section 147.
39. Amendment of section 149.
40. Substitution of new section for section 150.
41. Amendment of section 162.
42. Amendment of section 164.
43. Amendment of section 165.
44. Amendment of section 166.
45. Amendment of section 169.
46. Amendment of section 195.
47. Amendment of section 202.
48. Amendment of section 203.
49. Amendment of section 204.
50. Amendment of section 206.
51. Substitution of new sections for sections 217 and 218.
52. Amendment of section 227.
53. Amendment of section 228.
54. Amendment of section 232.
55. Amendment of section 235.
56. Amendment of section 262.
57. Amendment of section 263.
58. Amendment of section 266.
59. Amendment of section 267.
iii
CLAUSES
60. Amendment of section 270.
61. Amendment of section 275.
62. Amendment of section 279.
63. Amendment of section 286.
64. Amendment of section 295.
65. Amendment of section 296.
66. Amendment of section 332.
67. Amendment of section 349.
68. Amendment of section 351.
69. Amendment of section 352.
70. Insertion of new section 354A.
71. Amendment of section 379.
72. Amendment of section 393.
73. Amendment of section 394.
74. Amendment of section 395.
75. Amendment of section 397.
76. Amendment of section 399.
77. Amendment of section 400.
78. Amendment of section 402.
79. Amendment of section 411.
80. Amendment of section 423.
81. Amendment of section 424.
82. Amendment of section 425.
83. Substitution of new sections for sections 427 and 428.
84. Amendment of section 439.
85. Amendment of section 440.
86. Omission of section 443.
87. Substitution of new section for section 446.
88. Omission of section 447.
89. Substitution of new section for section 454.
90. Amendment of section 466.
91. Amendment of section 470.
92. Amendment of section 471.
93. Amendment of section 473.
94. Amendment of section 474.
95. Amendment of section 475.
96. Amendment of section 476.
97. Amendment of section 477.
98. Amendment of section 478.
99. Amendment of section 479.
100. Substitution of new sections for sections 480 and 481.
101. Amendment of section 482.
iv
CLAUSES
102. Amendment of section 483.
103. Amendment of section 484.
104. Amendment of section 485.
105. Amendment of section 494.
106. Amendment of section 522.
107. Amendment of section 536.
108. Amendment of Schedule III.
109. Amendment of Schedule IV.
110. Amendment of Schedule VI.
111. Amendment of Schedule XI.
112. Amendment of Schedule XII.
113. Amendment of Schedule XIV.
CHAPTER IV
THE FOREIGN ASSETS OF SMALL TAXPAYERS DISCLOSURE SCHEME, 2026
114. Short title and commencement.
115. Definitions.
116. Declaration by declarant.
117. Amount payable by declarant.
118. Manner of making declaration.
119. Procedure relating to manner of payment.
120. Any income or asset declared not to be included in total income.
121. Any income or asset declared not to affect finality of completed assessments.
122. Amount paid in pursuance of declaration non-refundable.
123. Grant of immunity from penalty and prosecution.
124. Non-application of scheme.
125. Effect of declaration on pending assessment proceedings.
126. Power of Board to issue directions, etc.
127. Power to make rules.
128. Power to remove difficulties.
CHAPTER V
INDIRECT TAXES
Customs
129. Amendment of section 1.
130. Amendment of section 2.
131. Amendment of section 28.
v
CLAUSES
132. Amendment of section 28J.
133. Insertion of new section 56A.
134. Substitution of new section for section 67.
135. Amendment of section 84.
Customs Tariff
136. Amendment of First Schedule.
Central Goods and Service Tax
137. Amendment of section 15.
138. Amendment of section 34.
139. Amendment of section 54.
140. Amendment of section 101A.
Integrated Goods and Service Tax
141. Amendment of section 13.
CHAPTER VI
MISCELLANEOUS
PART I
AMENDMENT TO THE FINANCE ACT, 2001
142. Amendment of Seventh Schedule to Act 14 of 2001.
PART II
AMENDMENTS TO THE FINANCE (NO.2) ACT, 2004
143. Amendment of Act 23 of 2004.
PART III
AMENDMENT TO THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND
IMPOSITION OF TAX ACT, 2015
144. Amendment of Act 22 of 2015.
THE FIRST SCHEDULE.
THE SECOND SCHEDULE.
THE THIRD SCHEDULE.
THE FOURTH SCHEDULE.
THE FIFTH SCHEDULE.
THE SIXTH SCHEDULE.
AS INTRODUCED IN LOK SABHA
ON 1ST FEBRUARY, 2026
BILL NO. 3 OF 2026
THE FINANCE BILL, 2026
A
BILL
to give effect to the financial proposals of the Central Government for the
financial year 2026-2027.
BE it enacted by Parliament in the Seventy-seventh Year of the Republic
of India as follows:––
CHAPTER I
PRELIMINARY
Short
title
and
commence-
ment.
1. (1) This Act may be called the Finance Act, 2026.
(2) Save as otherwise provided in this Act,––
(a) sections 2 to 113, clause (b) of section 136 and section 140 shall
come into force on the 1st day of April, 2026;
(b) clauses (c) and (d) of section 136 and section 142 shall come into
force on the 1st day of May, 2026;
(c) sections 137 to 139 shall come into force on such date as the
Central Government may, by notification in the Official Gazette, appoint.
2
CHAPTER II
RATES OF INCOME-TAX
Income-tax
under Act 43
of 1961.
2. (1) Subject to the provisions of sub-sections (2), (3), (4) and (5), for the
assessment year commencing on the 1st day of April, 2026, income-tax shall
be charged under the provisions of the Income-tax Act, 1961 (herein referred
to as the said Act) at the rates specified in Part I-A of the First Schedule and
such tax shall be increased by a surcharge, for the purposes of the Union,
calculated in each case in the manner provided therein.
(2) (a) Where an assessee as specified in column B of the Table below,
has, in the previous year, any net agricultural income exceeding five
thousand rupees, in addition to the total income, and the total income
exceeds the maximum amount not chargeable to income-tax as specified in
column C of the said Table, in respect of the said assessee, the net
agricultural income shall be taken into account, only for the purpose of
charging income-tax in respect of the total income.
43 of 1961.
TABLE
Sl.
No.
Assessee
Maximum
amount not
chargeable to
income-tax
A
B
C
1.
(i) Every individual other than the individual
referred to in Sl. No. 2 or 3; or
(ii) Hindu undivided family; or
(iii) association of persons or body of individuals,
whether incorporated or not; or
(iv) every artificial juridical person referred to in
section 2(31)(vii) of the said Act,
not being an assessee to which Paragraph B, C, D
or E of Part I-A of the First Schedule applies or to
whom Sl. No. 4 applies.
Rs. 2,50,000.
2.
Every individual, being a resident in India, who is
of the age of sixty or more but less than eighty
years at any time during the previous year.
Rs. 3,00,000.
3.
Every individual, being a resident in India, who is
of the age of eighty years or more at any time
during the previous year.
Rs. 5,00,000.
3
4.
Assessee whose income is chargeable to tax under
section 115BAC(1A) of the said Act.
Rs. 4,00,000.
(b) For the purposes of clause (a), the income-tax chargeable shall be
computed as per the following formula:—
Zo = Xo – Yo
where,––
Zo = the income-tax chargeable for the purposes of clause (a);
Xo = the amount of income-tax determined in respect of the Aggregate
Income (AIo) at the rates specified in Paragraph A of Part I-A of the First
Schedule or sub-section (1A) of section 115BAC of the said Act, as if such
AIo were the total income; and
Yo = the amount of income-tax determined in respect of the net agricultural
income increased by a sum as specified in column C of the Table mentioned
in clause (a) at the rates specified in the said Paragraph A or sub-section
(1A) of section 115BAC of the said Act, as if the net agricultural income as
so increased were the total income;
Aggregate Income (AIo) = Total income + Net agricultural income.
(3) In cases to which the provisions of Chapter XII or Chapter XII-A or
section 115JB or section 115JC or Chapter XII-FA or Chapter XII-FB or sub-
section (1A) of section 161 or section 164 or section 164A or section 167B of
the said Act apply, the tax chargeable shall be determined—
(i) as provided in that Chapter or that section; and
(ii) with reference to the rates imposed by sub-section (1) or the rates as
specified in that Chapter or section, as the case may be.
(4) For the purposes of sub-section (3),—
(a) the amount of income-tax computed in accordance with the
provisions of section 111A or section 112 or section 112A of the said Act
shall be increased by a surcharge, for the purposes of the Union, as provided
in Paragraph F of Part I-A of the First Schedule, except in case of—
(i) a domestic company whose income is chargeable to tax under
section 115BAA or section 115BAB of the said Act;
4
(ii) an individual or Hindu undivided family or association of
persons, or body of individuals, whether incorporated or not, or an
artificial juridical person referred to in sub-clause (vii) of clause (31) of
section 2 of the said Act whose income is chargeable to tax under sub-
section (1A) of section 115BAC of the said Act; or
(iii) a co-operative society resident in India, whose income is
chargeable to tax under section 115BAD or section 115BAE of the said
Act;
(b) in respect of income chargeable to tax under the section as specified
in column B of the Table below, in the case of a person as specified in
column C of the said Table, the amount of income-tax computed shall be
increased by a surcharge, for the purposes of the Union, calculated at the
rate or rates as specified in column D of the said Table, of such income-tax.
TABLE
Sl. No.
Section
Person
Rate of surcharge
A
B
C
D
1.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
(i)
Every
individual; or
(ii)
Hindu
undivided
family;
or
(iii) association of
persons, except in a
case
of
an
association
of
persons consisting
of only companies
as
its
members,
whether
incorporated or not;
or
(iv)
body
of
individuals,
whether
incorporated or not;
or
(v) every artificial
juridical
person
(i) Where the total income
exceeds Rs. 50,00,000 but
does
not
exceed
Rs.
1,00,00,000, at the rate of
ten per cent.;
(ii) where the total income
exceeds Rs. 1,00,00,000
but does not exceed Rs.
2,00,00,000, at the rate of
fifteen per cent.;
(iii)
where
the
total
income
exceeds
Rs.
2,00,00,000 but does not
exceed Rs. 5,00,00,000, at
the rate of twenty-five per
cent.;
(iv)
where
the
total
income
exceeds
Rs.
5,00,00,000, at the rate of
thirty-seven per cent.
5
referred
to
in
section 2(31)(vii) of
the said Act,
not
having
any
income
under
section 115AD of
the said Act and not
having any income
chargeable to tax
under
section
115BAC(1A) of the
said Act.
2.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
(i)
Every
individual; or
(ii) association of
persons, except in a
case
of
an
association
of
persons consisting
of only companies
as
its
members,
whether
incorporated or not;
or
(iii)
body
of
individuals,
whether
incorporated or not;
or
(iv) every artificial
juridical
person
referred
to
in
section 2(31)(vii) of
the said Act,
having any income
under
section
115AD of the said
Act, and not having
any
income
chargeable to tax
(i) Where the total income
exceeds Rs. 50,00,000 but
does
not
exceed
Rs.
1,00,00,000, at the rate of
ten per cent.;
(ii)
Where
the
total
income
exceeds
Rs.
1,00,00,000 but does not
exceed Rs. 2,00,00,000, at
the rate of fifteen per
cent.;
(iii)
where
the
total
income
[excluding
dividend income or short-
term or long-term capital
gains as referred to in
section 115AD(1)(b) of
the said Act] exceeds Rs.
2,00,00,000 but does not
exceed Rs. 5,00,00,000, at
the rate of twenty-five per
cent.;
(iv)
where
the
total
income
[excluding
dividend income or short-
term or long-term capital
gains as referred to in
section 115AD(1)(b) of
the said Act] exceeds Rs.
6
under
section
115BAC(1A) of the
said Act.
5,00,00,000, at the rate of
thirty-seven per cent.;
(v) where the total income
[including
dividend
income or short-term or
long-term capital gains as
referred to in section
115AD(1)(b) of the said
Act]
exceeds
Rs.
2,00,00,000, but is not
covered in clauses (iii)
and (iv), at the rate of
fifteen per cent.;
(vi)
where
the
total
income
includes
any
dividend income or short-
term or long-term capital
gains as referred to in
section 115AD(1)(b) of
the said Act, the rate of
surcharge on the income-
tax calculated on that part
of
income
shall
not
exceed fifteen per cent.
and the provisions of
clause (i) or (ii), as the
case may be, shall apply
accordingly.
3.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
Association
of
persons consisting
of only companies
as its members.
(i) Where the total income
exceeds Rs. 50,00,000 but
does
not
exceed
Rs.
1,00,00,000, at the rate of
ten per cent.;
(ii) where the total income
exceeds Rs. 1,00,00,000,
at the rate of fifteen per
cent.
7
115E, 115JB
or 115JC.
4.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
Every co-operative
society except such
co-operative society
whose income is
chargeable to tax
under
section
115BAD
or
115BAE of the said
Act.
(i) Where the total income
exceeds Rs. 1,00,00,000
but
does
not
exceed
Rs.10,00,00,000, at the
rate of seven per cent.;
(ii) where the total income
exceeds Rs. 10,00,00,000,
at the rate of twelve per
cent.
5.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
Every firm or local
authority.
Where the total income
exceeds Rs. 1,00,00,000,
at the rate of twelve per
cent.
6.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
Every
domestic
company
except
such
domestic
company
whose
income
is
chargeable to tax
under
section
(i) Where the total income
exceeds Rs. 1,00,00,000
but does not exceed Rs.
10,00,00,000, at the rate
of seven per cent.;
8
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
115BAA
or
115BAB of the said
Act.
(ii) where the total income
exceeds Rs. 10,00,00,000,
at the rate of twelve per
cent.
7.
115A,
115AB,
115AC,
115ACA,
115AD,
115B,
115BA,
115BB,
115BBA,
115BBC,
115BBF,
115BBG,
115BBH,
115BBI,
115BBJ,
115E, 115JB
or 115JC.
Every
company,
other
than
a
domestic company.
(i) Where the total income
exceeds Rs. 1,00,00,000
but does not exceed Rs.
10,00,00,000, at the rate
of two per cent.;
(ii) where the total income
exceeds Rs. 10,00,00,000,
at the rate of five per cent.
8.
115BBE
(1)(i).
Any assessee.
Twenty-five per cent.
9.
115BAA or
115BAB.
Every
domestic
company.
Ten per cent.
10.
115BAC
(1A).
(i)
Every
individual; or
(ii)
Hindu
undivided
family;
or
(iii) association of
persons, except in a
case
of
an
association
of
(i) Where the total income
(including
dividend
income or capital gains
under the provisions of
sections 111A, 112 and
112A of the said Act)
exceeds Rs. 50,00,000 but
does
not
exceed
Rs.
1,00,00,000, at the rate of
ten per cent.;
9
persons consisting
of only companies
as
its
members,
whether
incorporated or not;
or
(iv)
body
of
individuals,
whether
incorporated or not;
or
(v) every artificial
juridical
person
referred
to
in
section 2(31)(vii) of
the said Act.
(ii) where the total income
(including
dividend
income or capital gains
under the provisions of
sections 111A, 112 and
112A of the said Act)
exceeds Rs. 1,00,00,000
but does not exceed Rs.
2,00,00,000, at the rate of
fifteen per cent.;
(iii)
where
the
total
income
(excluding
dividend
income
or
capital gains under the
provisions
of
sections
111A, 112 and 112A of
the said Act) exceeds Rs.
2,00,00,000, at the rate of
twenty-five per cent.;
(iv)
where
the
total
income
(including
dividend
income
or
capital gains under the
provisions
of
sections
111A, 112 and 112A of
the said Act) exceeds Rs.
2,00,00,000, but is not
covered in clause (iii) at
the rate of fifteen per
cent.;
(v) where the total income
includes
any
dividend
income or capital gains
under the provisions of
sections 111A, 112 and
112A of the said Act, the
rate of surcharge on the
income-tax in respect of
that part of income shall
not exceed fifteen per
cent. and the provisions of
clause (i) or (ii), as the
10
case may be, shall apply
accordingly.
11.
115BAC
(1A).
Association
of
persons consisting
of only companies
as its members.
(i) Where the total income
exceeds Rs. 50,00,000 but
does
not
exceed
Rs.
1,00,00,000, at the rate of
ten per cent.;
(ii) where the total income
exceeds Rs. 1,00,00,000,
at the rate of fifteen per
cent.
12.
115BAD or
115BAE.
Every co-operative
society resident in
India.
Ten per cent.
13.
115AD(1)
(a)
Specified
fund,
referred to in clause
(c)
of
the
Explanation
to
section 10(4D) of
the said Act, whose
income
includes
any income under
section
115AD(1)(a) of the
said Act.
No surcharge on income-
tax computed on that part
of income as referred to in
section 115AD(1)(a) of
the said Act.
(5) For the purposes of sub-section (4), in respect of the persons
mentioned in column B of the Table below, having total income chargeable
to tax under sub-section (1A) of section 115BAC or section 115JB or section
115JC of the said Act, as the case may be, and such income exceeds the
amount as specified in column C of the said Table but does not exceed the
amount specified in column D thereof, the total amount payable as income-
tax and surcharge thereon shall not exceed the amount determined as per the
following formula:—
To = Ro + So
where,––
To = the total amount beyond which the total amount payable as income-
tax and surcharge thereon shall not exceed;
11
Ro = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table below; and
So = the total income – amount as specified in column C of the said Table.
TABLE
Sl.
No.
Person specified
in Table below
clause (b) of sub-
section (4)
Amount
Amount
A
B
C
D
1.
Persons specified
against Sl. Nos. 1
and 2 in column
C.
Rs. 50,00,000.
Rs. 1,00,00,000.
Rs. 1,00,00,000.
Rs. 2,00,00,000.
Rs. 2,00,00,000.
Rs. 5,00,00,000.
Rs. 5,00,00,000.
-
2.
Person specified
against Sl. No. 3
in column C.
Rs. 50,00,000.
Rs. 1,00,00,000.
Rs. 1,00,00,000.
-
3.
Person specified
against Sl. No. 4
in column C.
Rs. 1,00,00,000.
Rs. 10,00,00,000.
Rs. 10,00,00,000.
-
4.
Person specified
against Sl. No. 5
in column C.
Rs. 1,00,00,000.
-
5.
Persons specified
against Sl. Nos. 6
and 7 in column
C.
Rs. 1,00,00,000.
Rs. 10,00,00,000.
Rs. 10,00,00,000.
-
6.
Persons specified
against Sl. Nos.
10 and 11 in
column C.
Rs. 50,00,000.
Rs. 1,00,00,000.
Rs. 1,00,00,000.
Rs. 2,00,00,000.
Rs. 2,00,00,000.
-
(6) The amount of income-tax as specified in sub-sections (1) to (5) and
as increased by the applicable surcharge, for the purposes of the Union,
calculated in the manner provided therein, shall be further increased by an
additional surcharge, for the purposes of the Union, to be called the “Health
and Education Cess on income-tax”, calculated at the rate of four per cent. of
12
such income-tax and surcharge so as to fulfil the commitment of the
Government to provide and finance quality health services and universalised
quality basic education and secondary and higher education.
(7) For the purposes of this section and Parts I-A and IV-A of the First
Schedule,—
(a) “domestic company” means an Indian company or any other
company which, in respect of its income liable to income-tax under the
said Act for the assessment year commencing on the 1st day of April,
2026, has made the prescribed arrangements for the declaration and
payment within India of the dividends (including dividends on preference
shares) payable out of such income;
(b) “net agricultural income” in relation to a person, means the total
amount of agricultural income, from whatever source derived, of that
person computed in accordance with the rules contained in Part IV-A of
the First Schedule;
(c) all other words and expressions used in this section and Parts I-A
and IV-A of the First Schedule but not defined in this sub-section and
defined in the said Act shall have the meanings, respectively, assigned to
them in said Act.
Income-tax
under Act 30
of 2025.
3. (1) Subject to the provisions of sub-sections (2), (3), (4) and (5), for the
tax year commencing on the 1st day of April, 2026, income-tax shall be
charged under the provisions of the Income-tax Act, 2025 (herein referred to
as the said Act) at the rates specified in Part I-B of the First Schedule and
such tax shall be increased by a surcharge, for the purposes of the Union,
calculated in each case in the manner provided therein.
30 of 2025.
(2) (a) Where an assessee as specified in column B of the Table below,
has, in the tax year, any net agricultural income exceeding ₹ 5000, in addition
to the total income, and the total income exceeds the maximum amount not
chargeable to income-tax as specified in column C of the said Table, in
respect of the said assessee, the net agricultural income shall be taken into
account only for the purpose of charging income-tax in respect of the total
income.
13
TABLE
Sl.
No.
Assessee
Maximum
amount not
chargeable to
income-tax
A
B
C
1.
(i) Every individual other than the individual
referred to in Sl. No. 2 or 3; or
(ii) Hindu undivided family; or
(iii) association of persons or body of individuals,
whether incorporated or not; or
(iv) every artificial juridical person referred to in
section 2(77)(g) of the said Act,
not being an assessee to which Paragraph B, C, D
or E of Part I-B of the First schedule applies or to
whom Sl. No. 4 applies.
₹ 250000.
2.
Every individual, being a resident in India, who is
of the age of sixty or more but less than eighty years
at any time during the tax year.
₹ 300000.
3.
Every individual, being a resident in India, who is
of the age of eighty years or more at any time during
the tax year.
₹ 500000.
4.
Assessee whose income is chargeable to tax under
section 202 of the said Act.
₹ 400000.
(b) For the purposes of clause (a), the income-tax chargeable shall be
computed as per the following formula:—
Zn = Xn – Yn
where,––
Zn = the income-tax chargeable for the purposes of clause (a);
Xn = the amount of income-tax determined in respect of the Aggregate
Income (AIn) at the rates specified in Paragraph A of Part I-B of the First
Schedule or section 202 of the said Act, as if such AIn were the total income;
and
Yn = the amount of income-tax determined in respect of the net
agricultural income increased by a sum as specified in column C of the Table
mentioned in clause (a) at the rates specified in the said Paragraph A or
14
section 202 of the said Act, as if the net agricultural income as so increased
were the total income;
Aggregate Income (AIn) = Total income + Net agricultural income.
(3) In cases to which the provisions of Part A, B, C or D of Chapter XIII
or section 207 to 218, 223, 224, 307, 308, 311 or 334 of the said Act apply,
the tax chargeable shall be determined—
(i) as provided in that Chapter or that section; and
(ii) with reference to the rates imposed by sub-section (1) or the rates
as specified in that Chapter or section, as the case may be.
(4) For the purposes of sub-section (3),—
(a) the amount of income-tax computed in accordance with the
provisions of section 196, 197 or 198 of the said Act shall be increased by
a surcharge, for the purposes of the Union, as provided in Paragraph F of
Part I-B of the First Schedule, except in case of—
(i) a domestic company whose income is chargeable to tax under
section 200 or 201 of the said Act;
(ii) an individual or Hindu undivided family or association of
persons, or body of individuals, whether incorporated or not, or an
artificial juridical person referred to in section 2(77)(g) of the said Act
whose income is chargeable to tax under section 202 of the said Act; or
(iii) a co-operative society resident in India, whose income is
chargeable to tax under section 203 or 204 of the said Act;
(b) in respect of income chargeable to tax under the section as specified
in column B of the Table below, in the case of a person as specified in
column C of the said Table, the amount of income-tax computed shall be
increased by a surcharge, for the purposes of the Union, calculated at the
rate or rates as specified in column D of the said Table, of such income-tax.
TABLE
Sl.
No.
Section
Person
Rate of surcharge
A
B
C
D
1.
193, 194,
199, 206,
207, 208,
(i) Every individual;
or
(i) Where the total income
exceeds ₹ 5000000 but
does
not
exceed
₹
15
209, 210,
211, 214,
218
or
334.
(ii) Hindu undivided
family; or
(iii) association of
persons, except in a
case
of
an
association
of
persons consisting of
only companies as its
members,
whether
incorporated or not;
or
(iv)
body
of
individuals, whether
incorporated or not;
or
(v) every artificial
juridical
person
referred to in section
2(77)(g) of the said
Act,
not
having
any
income under section
210 of the said Act,
and not having any
income chargeable to
tax under section 202
of the said Act.
10000000, at the rate of
10%;
(ii) where the total income
exceeds ₹ 10000000 but
does
not
exceed
₹
20000000, at the rate of
15%;
(iii)
where
the
total
income
exceeds
₹
20000000 but does not
exceed ₹ 50000000, at the
rate of 25%;
(iv)
where
the
total
income
exceeds
₹
50000000, at the rate of
37%.
2.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
(i) Every individual;
or
(ii) association of
persons, except in a
case
of
an
association
of
persons consisting of
only companies as its
members,
whether
incorporated or not;
or
(i) Where the total income
exceeds ₹ 5000000 but
does
not
exceed
₹
10000000, at the rate of
10%;
(ii) where the total income
exceeds ₹ 10000000 but
does
not
exceed
₹
20000000, at the rate of
15%;
(iii)
where
the
total
income
[excluding
16
(iii)
body
of
individuals, whether
incorporated or not;
or
(iv) every artificial
juridical
person
referred to in section
2(77)(g) of the said
Act,
having any income
under section 210 of
the said Act, and not
having any income
chargeable
to
tax
under section 202 of
the said Act.
dividend income or short-
term or long-term capital
gains as referred to in
section 210(1) [Table: Sl.
Nos. 2 to 5] of the said Act
exceeds ₹ 20000000 but
does
not
exceed
₹
50000000, at the rate of
25%;
(iv)
where
the
total
income
[excluding
dividend income or short-
term or long-term capital
gains as referred to in
section 210(1) [Table: Sl.
Nos. 2 to 5] of the said Act
exceeds ₹ 50000000, at
the rate of 37%;
(v) Where the total income
[including
dividend
income or short-term or
long-term capital gains as
referred to in section
210(1) [Table: Sl. Nos. 2
to 5] of the said Act
exceeds ₹ 20000000, but
is not covered in clauses
(iii) and (iv), at the rate of
15%;
(vi)
where
the
total
income
includes
any
dividend income or short-
term or long-term capital
gains as referred to in
section 210(1) [Table: Sl.
Nos. 2 to 5] of the said Act
the rate of surcharge on
the income-tax calculated
on that part of income
shall not exceed 15% and
the provisions of clause (i)
or (ii), as the case may be,
shall apply accordingly.
17
3.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
Association
of
persons consisting of
only companies as its
members.
(i) Where the total income
exceeds ₹ 5000000 but
does
not
exceed
₹
10000000, at the rate of
10%;
(ii) where the total income
exceeds ₹ 10000000, at
the rate of 15%.
4.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
Every
co-operative
society except such
co-operative society
whose
income
is
chargeable
to
tax
under section 203 or
204 of the said Act.
(i) Where the total income
exceeds ₹ 10000000 but
does
not
exceed
₹
100000000, at the rate of
7%;
(ii) where the total income
exceeds ₹ 100000000, at
the rate of 12%.
5.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
Every firm or local
authority.
Where the total income
exceeds ₹ 10000000, at
the rate of 12%.
6.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
Every
domestic
company except such
domestic
company
whose
income
is
chargeable
to
tax
under section 200 or
201 of the said Act.
(i) Where the total income
exceeds ₹ 10000000 but
does
not
exceed
₹
100000000, at the rate of
7%;
(ii) where the total income
exceeds ₹ 100000000, at
the rate of 12%.
7.
193, 194,
199, 206,
207, 208,
209, 210,
211, 214,
218
or
334.
Every
company,
other than a domestic
company.
(i) Where the total income
exceeds ₹ 10000000 but
does
not
exceed
₹
100000000, at the rate of
2%;
18
(ii) where the total income
exceeds ₹ 100000000, at
the rate of 5%.
8.
195(1)(i).
Any assessee.
25%
9.
200
or
201.
Every
domestic
company.
10%
10.
202.
(i) Every individual;
or
(ii) Hindu undivided
family; or
(iii) association of
persons, except in a
case
of
an
association
of
persons consisting of
only companies as its
members,
whether
incorporated or not;
or
(iv)
body
of
individuals, whether
incorporated or not;
or
(v) every artificial
juridical
person
referred to in section
2(77)(g) of the said
Act.
(i) Where the total income
(including
dividend
income or capital gains
under the provisions of
sections 196, 197 and 198
of the said Act) exceeds ₹
5000000 but does not
exceed ₹ 10000000, at the
rate of 10%;
(ii) where the total income
(including
dividend
income or capital gains
under the provisions of
sections 196, 197 and 198
of the said Act) exceeds ₹
10000000 but does not
exceed ₹ 20000000, at the
rate of 15%;
(iii)
where
the
total
income
(excluding
dividend income or capital
gains under the provisions
of sections 196, 197 and
198 of the said Act)
exceeds ₹ 20000000, at
the rate of 25%;
(iv)
where
the
total
income
(including
dividend income or capital
gains under the provisions
of sections 196, 197 and
198 of the said Act)
exceeds ₹ 20000000, but
19
is not covered in clause
(iii), at the rate of 15%;
(v) where the total income
includes
any
dividend
income or capital gains
under the provisions of
sections 196, 197 and 198
of the said Act, the rate of
surcharge on the income-
tax in respect of that part
of income shall not exceed
15% and the provisions of
clause (i) or (ii), as the
case may be, shall apply
accordingly.
11.
202.
Association
of
persons consisting of
only companies as its
members.
(i) Where the total income
exceeds ₹ 5000000 but
does
not
exceed
₹
10000000, at the rate of
10%;
(ii) where the total income
exceeds ₹ 10000000, at
the rate of 15%.
12.
203
or
204.
Every
co-operative
society resident in
India.
10%
13.
210(1)
[Table: Sl.
No. 1]
Specified
fund,
referred
to
in
Schedule VI [Note
1(g)] of the said Act,
whose
income
includes any income
under section 210(1)
[Table: Sl. No. 1] of
the said Act.
No surcharge on income-
tax computed on that part
of income as referred to in
section 210(1) [Table: Sl.
No. 1] of the said Act.
(5) For the purposes of sub-section (4), in respect of the persons
mentioned in column B of the Table below, having total income chargeable
to tax under section 202, 206(1) or 206(2) of the said Act, as the case may be,
and such income exceeds the amount as specified in column C of the said
20
Table but does not exceed the amount specified in column D thereof, the total
amount payable as income-tax and surcharge thereon shall not exceed the
amount determined as per the following formula:—
Tn = Rn + Sn
where,––
Tn = the total amount beyond which the total amount payable as income-
tax and surcharge thereon shall not exceed;
Rn = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table below; and
Sn = the total income – amount as specified in column C of the said Table.
TABLE
Sl.
No.
Person specified in
Table below clause
(b) of sub-section
(4)
Amount
Amount
A
B
C
D
1.
Persons specified
against Sl. Nos. 1
and 2 in column C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
₹ 20000000.
₹ 20000000.
₹ 50000000.
₹ 50000000.
-
2.
Person
specified
against Sl. No. 3 in
column C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
-
3.
Person
specified
against Sl. No. 4 in
column C.
₹ 10000000.
₹ 100000000.
₹ 100000000.
-
4.
Person
specified
against Sl. No. 5 in
column C.
₹ 10000000.
-
5.
Persons specified
against Sl. Nos. 6
and 7 in column C.
₹ 10000000.
₹ 100000000.
₹ 100000000.
-
21
6.
Persons specified
against Sl. Nos. 10
and 11 in column
C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
₹ 20000000.
₹ 20000000.
-
(6) In cases in which tax has to be charged and paid under section 170(5)
or section 352 of the said Act, the tax shall be charged and paid at the rates
as specified in those sections and shall be increased by a surcharge, for the
purposes of the Union, calculated at the rate of 12% of such tax.
(7) In cases in which tax has to be deducted under the sections as specified
in column B of the Table below, the deductions shall be made at the rates
specified in column C of the said Table, in respect of the persons specified in
column D of the said Table, and shall be increased by a surcharge, for the
purposes of the Union, calculated at the rate or rates as specified in column E
of the said Table, of such tax.
TABLE
Sl.
No.
Section under
which tax has
to be
deducted
Rates on
which
deduction
is to be
made
Person in
respect of
which
deduction
has to be
made
Rate of
surcharge
A
B
C
D
E
1.
(i)
393(1)
[Table:
Sl.
Nos. 1(i) and
5];
(ii)
393(2)
[Table:
Sl.
Nos. 7, 8, 9
and 17]; and
(iii)
393(3)
[Table:
Sl.
Nos. 1, 2 and
3],
at the rates in
force.
Rates
specified
in Part II
of
the
First
Schedule.
Person
to
whom
the
section
as
specified in
column
B
applies.
Calculated
in
cases
wherever
prescribed, in the
manner
as
provided in Part
II of the First
Schedule.
2.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Rates
specified
in
sections
(i)
Every
individual;
or
(i)
Where
the
income
or
the
aggregate of such
incomes paid or
22
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
referred to
in column
B.
(ii)
Hindu
undivided
family; or
(iii)
association
of persons,
except in a
case of an
association
of
persons
consisting of
only
companies
as
its
members,
whether
incorporated
or not; or
(iv) body of
individuals,
whether
incorporated
or not; or
(v)
every
artificial
juridical
person
referred to in
section
2(77)(g) of
the said Act,
being a non-
resident,
except
in
case
of
deduction on
dividend
income
under
section
393(2)[Tabl
e: Sl. Nos.
likely to be paid
and subject to the
deduction
exceeds
₹
5000000 but does
not
exceed
₹
10000000, at the
rate of 10%;
(ii)
where
the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
10000000
but
does not exceed ₹
20000000, at the
rate of 15%;
(iii) where the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
20000000
but
does not exceed ₹
50000000, at the
rate of 25%;
(iv) where the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
50000000, at the
rate of 37%.
23
15 and 16]
of the said
Act or where
the income
of the person
is
chargeable
to tax under
section 202
of the said
Act.
3.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
Rates
specified
in
sections
referred to
in column
B.
(i)
Every
individual;
or
(ii)
Hindu
undivided
family; or
(iii)
association
of persons,
except in a
case of an
association
of
persons
consisting of
only
companies
as
its
members,
whether
incorporated
or not; or
(iv) body of
individuals,
whether
incorporated
or not; or
(v)
every
artificial
juridical
person
(i)
Where
the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
5000000 but does
not
exceed
₹
10000000, at the
rate of 10%;
(ii)
where
the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
10000000
but
does not exceed ₹
20000000, at the
rate of 15%;
(iii) where the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
24
referred to in
section
2(77)(g) of
the said Act,
being a non-
resident,
where
the
income
of
the person is
chargeable
to tax under
section 202
of the said
Act
except
in case of
deduction on
dividend
income
under
section
393(2)[Tabl
e: Sl. Nos.
15 and 16]
of the said
Act.
20000000, at the
rate of 25%.
4.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
Rates
specified
in
sections
referred to
in column
B.
(i)
Every
individual;
or
(ii)
Hindu
undivided
family; or
(iii)
association
of persons,
except in a
case of an
association
of
persons
consisting of
only
companies
as
its
(i)
Where
the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
5000000 but does
not
exceed
₹
10000000, at the
rate of 10%;
(ii)
where
the
income
or
the
aggregate of such
incomes paid or
likely to be paid
and subject to the
25
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
members,
whether
incorporated
or not; or
(iv) body of
individuals,
whether
incorporated
or not; or
(v)
every
artificial
juridical
person
referred to in
section
2(77)(g) of
the said Act,
being a non-
resident, in
case
of
deduction on
dividend
income
under
section
393(2)[Tabl
e: Sl. Nos.
15 and 16]
of the said
Act.
deduction
exceeds
₹
10000000, at the
rate of 15%.
5.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Rates
specified
in
sections
referred to
in column
B.
Association
of persons,
being a non-
resident, and
consisting of
only
companies
as
its
members.
(i)
Where
the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
5000000
but
does not exceed ₹
10000000, at the
rate of 10%;
26
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
(ii) where the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
10000000, at the
rate of 15%.
6.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
Rates
specified
in
sections
referred to
in column
B.
Every
co-
operative
society,
being a non-
resident.
(i)
Where
the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
10000000
but
does not exceed ₹
100000000,
at
the rate of 7%;
(ii) where the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
100000000,
at
the rate of 12%.
7.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
Rates
specified
in
sections
referred to
in column
B.
Every firm,
being a non-
resident.
Where the income
or the aggregate
of such incomes
paid or likely to
be
paid
and
subject
to
the
deduction
exceeds
₹
10000000, at the
rate of 12%.
27
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
8.
(i) 392(7);
(ii)
393(1)
[Table:
Sl.
Nos. 1(ii), 2,
3, 4, 6, 7, 8(i),
8(ii),
8(iv),
8(v)
and
8(vi)];
(iii)
393(2)
[Table:
Sl.
Nos. 1 to 6,
10, 11 to 14,
15 and 16];
and
(iv)
393(3)
[Table:
Sl.
Nos. 4 to 7].
Rates
specified
in
sections
referred to
in column
B.
Every
company,
other than a
domestic
company.
(i)
Where
the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
10000000
but
does not exceed ₹
100000000,
at
the rate of 2%;
(ii) Where the
income or the
aggregate of such
incomes paid or
likely to be paid
and subject to the
deduction
exceeds
₹
100000000,
at
the rate of 5%.
(8) In cases in which tax has to be collected under section 393(1) [Table
: Sl. No. 8(iv). Note 2, Sl. No. 8(iv). Note 6 and Sl. No. 8(vi). Note 6] and
393(3)[Table: Sl. No. 1. Note 2 and Sl. No. 2. Note 2] of the said Act, the
collection shall be made at the rates specified in Part II of the First Schedule,
and shall be increased by a surcharge, for the purposes of the Union,
calculated, in cases wherever prescribed, in the manner provided therein.
(9) In cases as specified in column B of the Table below, in which tax has
to be collected under section 394(1) of the said Act, the collection shall be
made at the rates specified in that section and shall be increased by a
28
surcharge, for the purposes of the Union, calculated at the rate or rates
specified in column C of the said Table, of such tax.
TABLE
Sl.
No.
Person, in respect of
which collection has to
be made
Rate of surcharge
A
B
C
1.
(i) Every individual; or
(ii) Hindu undivided
family; or
(iii)
association
of
persons, except in a
case of an association
of persons consisting of
only companies as its
members,
whether
incorporated or not; or
(iv)
body
of
individuals,
whether
incorporated or not; or
(v)
every
artificial
juridical
person
referred to in section
2(77)(g) of the said
Act,
being a non-resident,
except in case where
the income of such
person is chargeable to
tax under section 202
of the said Act.
(i) Where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at the rate of
10%;
(ii) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 10000000 but
does not exceed ₹ 20000000, at the
rate of 15%;
(iii) where the amount or the
aggregate of such amounts collected
or likely to be collected and subject to
the collection, exceeds ₹ 20000000
but does not exceed ₹ 50000000, at the
rate of 25%;
(iv) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 50000000, at the
rate of 37%.
2.
(i) Every individual; or
(ii) Hindu undivided
family; or
(i) Where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at the rate of
10%;
29
(iii)
association
of
persons, except in a
case of an association
of persons consisting of
only companies as its
members,
whether
incorporated or not; or
(iv)
body
of
individuals,
whether
incorporated or not; or
(v)
every
artificial
juridical
person
referred to in section
2(77)(g) of the said
Act,
being a non-resident,
where the income of
such
person
is
chargeable to tax under
section 202 of the said
Act.
(ii) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 10000000 but
does not exceed ₹ 20000000, at the
rate of 15%;
(iii) where the amount or the
aggregate of such amounts collected
or likely to be collected and subject to
the collection, exceeds ₹ 20000000, at
the rate of 25%.
3.
Association of persons,
being a non-resident,
and consisting of only
companies
as
its
members.
(i) Where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection, exceeds ₹ 5000000 but
does not exceed ₹ 10000000, at the
rate of 10%;
(ii) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 10000000, at the
rate of 15%.
4.
Every
co-operative
society, being a non-
resident.
(i) Where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 10000000 but
does not exceed ₹ 100000000, at the
rate of 7%;
30
(ii) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 100000000, at
the rate of 12%.
5.
Every firm, being a
non-resident.
Where the amount or the aggregate of
such amounts collected or likely to be
collected and subject to the collection
exceeds ₹ 10000000, at the rate of
12%.
6.
Every company, other
than
a
domestic
company.
(i) Where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 10000000 but
does not exceed ₹ 100000000, at the
rate of 2%;
(ii) where the amount or the aggregate
of such amounts collected or likely to
be collected and subject to the
collection exceeds ₹ 100000000, at
the rate of 5%.
(10) Subject to the provisions of sub-section (14), in cases in which,—
(i) income-tax has to be charged under section 316(5), 317(2), 318,
319 or 320(2) of the said Act;
(ii) income-tax has to be deducted from, or paid on, income
chargeable under the head “Salaries” under section 392 (other than sub-
section (7) of the said section) of the said Act;
(iii) income-tax has to be deducted under section 393(1)[Table: Sl.
No. 8(iii)] of the said Act; or
(iv) the “advance tax” payable under Chapter XIX-C of the said Act
has to be computed at the rate or rates in force,
such income-tax or, as the case may be, “advance tax” shall be charged,
deducted or computed at the rate or rates specified in Part III of the First
Schedule and such tax shall be increased by a surcharge, for the purposes of
the Union, calculated in such cases and in such manner as provided therein.
31
(11) For the purposes of sub-section (10), in cases to which the provisions
of Part A, B, C or D of Chapter XIII or sections 207 to 218, 223, 224, 307,
308, 311 or 334 of the said Act apply, “advance tax” shall be computed with
reference to the rates imposed by this sub-section and sub-sections (10), (12)
and (13) or the rates as specified in that Chapter or section, as the case may
be.
(12) For the purposes of sub-sections (10) and (11),—
(a) the amount of “advance tax” computed in accordance with the
provisions of section 196, 197 or 198 of the said Act shall be increased by
a surcharge, for the purposes of the Union, as provided in Paragraph F of
Part III of the First Schedule, except in case of,—
(i) a domestic company whose income is chargeable to tax under
section 200 or 201 of the said Act;
(ii) an individual or Hindu undivided family or association of
persons, or body of individuals, whether incorporated or not, or an
artificial juridical person referred to in section 2(77)(g) of the said Act
whose income is chargeable to tax under section 202 of the said Act; or
(iii) a co-operative society resident in India, whose income is
chargeable to tax under section 203 or 204 of the said Act;
(b) In respect of income chargeable to tax under the section as specified
in column B of the Table below, in the case of a person as specified in
column C of the said Table, the amount of “advance tax” computed shall be
increased by a surcharge, for the purposes of the Union, calculated at the
rate or rates as specified in column D of the said Table, of such “advance
tax”.
TABLE
Sl.
No.
Section
Person
Rate of surcharge
A
B
C
D
1.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
(i)
Every
individual; or
(ii)
Hindu
undivided
family; or
(iii) association
of
persons,
(i) Where the total income
exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at
the rate of 10%;
(ii) where the total income
exceeds ₹ 10000000 but
does not exceed ₹ 20000000,
at the rate of 15%;
32
except in a case
of an association
of
persons
consisting
of
only companies
as its members,
whether
incorporated or
not; or
(iv)
body
of
individuals,
whether
incorporated or
not; or
(v)
every
artificial
juridical person
referred to in
section 2(77)(g)
of the said Act,
not having any
income
under
section 210 of
the said Act, and
not having any
income
chargeable
to
tax
under
section 202 of
the said Act.
(iii) where the total income
exceeds ₹ 20000000 but
does not exceed ₹ 50000000,
at the rate of 25%;
(iv) where the total income
exceeds ₹ 50000000, at the
rate of 37%.
2.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
(i)
Every
individual; or
(ii) association
of
persons,
except in a case
of an association
of
persons
consisting
of
only companies
as its members,
whether
(i) Where the total income
exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at
the rate of 10%;
(ii) where the total income
exceeds ₹ 10000000 but
does not exceed ₹ 20000000,
at the rate of 15%;
(iii) where the total income
[excluding dividend income
33
incorporated or
not; or
(iii)
body
of
individuals,
whether
incorporated or
not; or
(iv)
every
artificial
juridical person
referred to in
section 2(77)(g)
of the said Act,
having
any
income
under
section 210 of
the said Act and
not having any
income
chargeable
to
tax
under
section 202 of
the said Act.
or short term or long-term
capital gains as referred to in
section 210(1)[Table: Sl.
Nos. 2 to 5] of the said Act
exceeds ₹ 20000000 but
does not exceed ₹ 50000000,
at the rate of 25%;
(iv) where the total income
[excluding dividend income
or short term or long-term
capital gains as referred to in
section
210(1)[Table:
Sl.
Nos. 2 to 5] of the said Act
exceeds ₹ 50000000, at the
rate of 37%;
(v) where the total income
[including dividend income
or short term or long-term
capital gains as referred to in
section 210(1)[Table: Sl.
Nos. 2 to 5] of the said Act
exceeds ₹ 20000000, but is
not covered in clauses (iii)
and (iv), at the rate of 15%;
(vi) where the total income
includes
any
dividend
income or short term or
long-term capital gains as
referred
to
in
section
210(1)[Table: Sl. Nos. 2 to
5] of the said Act, the rate of
surcharge on the advance tax
computed on that part of
income shall not exceed 15%
and the provisions of clause
(i) or (ii), as the case may be,
shall apply accordingly.
3.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
Association
of
persons
consisting
of
only companies
as its members.
(i) Where the total income
exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at
the rate of 10%;
34
(ii) where the total income
exceeds ₹ 10000000, at the
rate of 15%.
4.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
Every
co-
operative
society
except
such
co-
operative
society
whose
income
is
chargeable
to
tax
under
section 203 or
204 of the said
Act.
(i) Where the total income
exceeds ₹ 10000000 but does
not exceed ₹ 100000000, at
the rate of 7%;
(ii) where the total income
exceeds ₹ 100000000, at the
rate of 12%.
5.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
Every firm or
local authority.
Where the total income
exceeds ₹ 10000000, at the
rate of 12%.
6.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
Every domestic
company except
such
domestic
company whose
income
is
chargeable
to
tax
under
section 200 or
201 of the said
Act.
(i) Where the total income
exceeds ₹ 10000000 but does
not exceed ₹ 100000000, at
the rate of 7%;
(ii) where the total income
exceeds ₹ 100000000, at the
rate of 12%.
7.
193, 194, 199,
206, 207, 208,
209, 210, 211,
214, 218 or
334.
Every company,
other
than
a
domestic
company.
(i) Where the total income
exceeds ₹ 10000000 but does
not exceed ₹ 100000000, at
the rate of 2%;
(ii) where the total income
exceeds ₹ 100000000, at the
rate of 5%.
8.
195(1)(i).
Any assessee.
25%
35
9.
200 or 201.
Every domestic
company.
10%
10. 202.
(i)
Every
individual; or
(ii)
Hindu
undivided
family; or
(iii) association
of
persons,
except in a case
of an association
of
persons
consisting
of
only companies
as its members,
whether
incorporated or
not; or
(iv)
body
of
individuals,
whether
incorporated or
not; or
(v)
every
artificial
juridical person
referred to in
section 2(77)(g)
of the said Act.
(i) Where the total income
(including dividend income
or capital gains under the
provisions of sections 196,
197 and 198 of the said Act)
exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at
the rate of 10%;
(ii) where the total income
(including dividend income
or capital gains under the
provisions of sections 196,
197 and 198 of the said Act)
exceeds ₹ 10000000 but
does not exceed ₹ 20000000,
at the rate of 15%;
(iii) where the total income
(excluding dividend income
or capital gains under the
provisions of sections 196,
197 and 198 of the said Act)
exceeds ₹ 20000000, at the
rate of 25%;
(iv) where the total income
(including dividend income
or capital gains under the
provisions of sections 196,
197 and 198 of the said Act)
exceeds ₹ 20000000, but is
not covered in clause (iii), at
the rate of 15%;
(v) where the total income
includes
any
dividend
income or capital gains
under the provisions of
sections 196, 197 and 198 of
the said Act, the rate of
surcharge on the “advance
tax” in respect of that part of
36
income shall not exceed 15%
and the provisions of clause
(i) or (ii), as the case may be,
shall apply accordingly.
11. 202.
Association
of
persons
consisting
of
only companies
as its members.
(i) Where the total income
exceeds ₹ 5000000 but does
not exceed ₹ 10000000, at
the rate of 10%;
(ii) where the total income
exceeds ₹ 10000000, at the
rate of 15%.
12. 203 or 204.
Every
co-
operative
society resident
in India.
10%
13. 210(1)[Table:
Sl. No. 1].
Specified fund,
referred to in
Schedule
VI
[Note 1(g)] of
the
said
Act,
whose
income
includes
any
income
under
section
210(1)
[Table: Sl. No.
1] of the said
Act.
No surcharge on advance tax
computed on that part of
income as referred to in
section 210(1)[Table: Sl. No.
1] of the said Act.
(13) For the purposes of sub-section (12), in respect of the persons
mentioned in column B of the Table below, having total income chargeable
to tax under section 202, 206(1) or 206(2) of the said Act, as the case may be,
and such income exceeds the amount as specified in column C of the said
Table but does not exceed the amount specified in column D thereof, the total
amount payable as “advance tax” on such income and surcharge thereon shall
not exceed the amount determined as per the following formula:—
Ta = Ra + Sa
where,––
37
Ta = the total amount beyond which the total amount payable as “advance
tax” on total income chargeable to tax under section 202, 206(1) or 206(2) of
the said Act, as the case may be, and surcharge thereon shall not exceed;
Ra = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table below; and
Sa = the total income – amount as specified in column C of the said Table.
TABLE
Sl.
No.
Person specified in
Table below clause
(b) of sub-section
(12)
Amount
Amount
A
B
C
D
1.
Persons
specified
against Sl. Nos. 1
and 2 in column C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
₹ 20000000.
₹ 20000000.
₹ 50000000.
₹ 50000000.
-
2.
Person
specified
against Sl. No. 3 in
column C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
-
3.
Person
specified
against Sl. No. 4 in
column C.
₹ 10000000.
₹ 100000000.
₹ 100000000.
-
4.
Person
specified
against Sl. No. 5 in
column C.
₹ 10000000.
-
5.
Persons
specified
against Sl. Nos. 6
and 7 in column C.
₹ 10000000.
₹ 100000000.
₹ 100000000.
-
6.
Persons
specified
against Sl. Nos. 10
and 11 in column C.
₹ 5000000.
₹ 10000000.
₹ 10000000.
₹ 20000000.
₹ 20000000.
-
(14) (a) Where an assessee, as specified in column B of the Table below,
has, in the tax year, if by virtue of any provision of the said Act, income-tax
38
is to be charged in respect of the income of a period other than the tax year,
in such other period, any net agricultural income exceeding ₹ 5000 in addition
to the total income, which exceeds the maximum amount not chargeable to
income-tax, as specified in column C of the said Table, in respect of the said
assessee, then, in charging income-tax under section 317(2) or 318 or 319 or
320(2) of the said Act or in computing the “advance tax” payable under
Chapter XIX-C of the said Act, at the rate or rates in force, the net agricultural
income shall be taken into account, only for the purpose of charging or
computing such income-tax or, as the case may be, “advance tax” in respect
of the total income.
TABLE
Sl.
No.
Assessee
Maximum amount not
chargeable to income-tax
A
B
C
1.
(i)
Every individual
other
than
the individual referred to in Sl. No. 2
or 3; or
(ii) Hindu undivided family; or
(iii) association of persons or body
of individuals, whether incorporated
or not; or
(iv) every artificial juridical person
referred to in section 2(77)(g) of
the said Act,
not being an assessee to which
Paragraph B, C, D or E of Part I-B of
the First schedule applies or to whom
Sl. No. 4 applies.
₹ 250000.
2.
Every individual, being a resident in
India, who is of the age of sixty or
more but less than eighty years at any
time during the tax year.
₹ 300000.
3.
Every individual, being a resident in
India, who is of the age of eighty years
or more at any time during the tax
year.
₹ 500000.
39
4.
Assessee whose income is chargeable
to tax under section 202 of the said
Act.
₹ 400000.
(b) For the purposes of clause (a), the income-tax or, as the case may
be, “advance tax” chargeable shall be computed as per the following
formula:—
Za = Xa – Ya
where,––
Za = the income-tax or, as the case may be, “advance tax” chargeable for
the purposes of clause (a);
Xa = the amount of income-tax or “advance tax” determined in respect of
the Aggregate Income (AIa) at the rates specified in Paragraph A of Part III
of the First Schedule or section 202 of the said Act, as if such AIn were the
total income; and
Ya = the amount of income-tax or “advance tax” determined in respect of
the net agricultural income increased by a sum as specified in column C of
the Table in clause (a) at the rates specified in the said Paragraph A or section
202 of the said Act, as if the net agricultural income as so increased were the
total income;
Aggregate Income (AIa) = Total income + Net agricultural income.
(c) The amount of income-tax or “advance tax” so arrived at, shall be
increased by a surcharge for the purposes of the Union, calculated in each
case, in the manner provided in this section or Paragraph F [(Table 1: Sl.
Nos. 1 and 2) and (Table 2: Sl. Nos. 1 and 2)] of Part III of the First
Schedule.
(15) The amount of income-tax as specified in sub-sections (1) to (5) and
as increased by the applicable surcharge, for the purposes of the Union,
calculated in the manner provided therein, shall be further increased by an
additional surcharge, for the purposes of the Union, to be called the “Health
and Education Cess on income-tax”, calculated at the rate of 4% of such
income-tax and surcharge so as to fulfil the commitment of the Government
to provide and finance quality health services and universalised quality basic
education and secondary and higher education.
(16) The amount of income-tax as specified in sub-sections (6) to (14) and
as increased by the applicable surcharge, for the purposes of the Union,
40
calculated in the manner provided therein, shall be further increased by an
additional surcharge, for the purposes of the Union, to be called the “Health
and Education Cess on income-tax”, calculated at the rate of 4% of such
income-tax and surcharge so as to fulfil the commitment of the Government
to provide and finance quality health services and universalised quality basic
education and secondary and higher education.
(17) The provisions of sub-section (16) shall not apply––
(i) to cases in which tax is to be deducted or collected under the
sections of the said Act mentioned in sub-sections (7), (8) and (9), if the
income subjected to deduction of tax at source or collection of tax at
source is paid to a domestic company and any other person who is resident
in India;
(ii) in respect of income-tax as specified in sub-sections (10) to (13),
calculated on income, referred to in section 210(1) [Table: Sl. No. 1] of
the said Act, of specified fund referred to in Schedule VI [Note 1(g)] of
the said Act.
(18) For the purposes of this section and Parts I-B, II, III and IV-B of the
First Schedule,—
(a) “domestic company” means an Indian company or any other
company which, in respect of its income liable to income-tax under the said
Act, for the tax year commencing on the 1st April, 2026, has made the
prescribed arrangements for the declaration and payment within India of the
dividends (including dividends on preference shares) payable out of such
income;
(b) “insurance commission” means any remuneration or reward,
whether by way of commission or otherwise, for soliciting or procuring
insurance business (including business relating to the continuance, renewal
or revival of policies of insurance);
(c) “net agricultural income” in relation to a person, means the total
amount of agricultural income, from whatever source derived, of that
person computed in accordance with the rules contained in Part IV-B of the
First Schedule;
(d) all other words and expressions used in this section and Parts I-B,
II, III and IV-B of the First Schedule but not defined in this sub-section and
defined in the said Act shall have the meanings, respectively, assigned to
them in the said Act.
41
CHAPTER III
DIRECT TAXES
A.–– Income-tax under the Income-tax Act, 1961
Amendment
of section
92CA.
4. In section 92CA of the Income-tax Act, 1961 (hereafter in this Part
referred to as the Income-tax Act), after sub-section (3A), the following sub-
section shall be inserted and shall be deemed to have been inserted with effect
from the 1st day of June, 2007, namely:––
43 of 1961.
“(3AA). Notwithstanding anything contained in any judgment, order
or decree of any court, for the purposes of making order under sub-section
(3), the calculation of sixty days shall be made and shall always be
deemed to have been made in the following manner, namely:––
(a) where the period of limitation expires on 31st of March of any year
(not being a leap year), the order under sub-section (3) may be made up
to the 30th of January of that year;
(b) where the period of limitation expires on 31st of March of any year
(being a leap year), the order under sub-section (3) may be made up to the
31st of January of that year;
(c) where the period of limitation expires on 31st of December of any
year, the order under sub-section (3) may be made up to the 1st of
November of that year.”.
Amendment
of section
139.
5. In section 139 of the Income-tax Act, with effect from the 1st day of
March, 2026,––
(a) in sub-section (1), for Explanation 2, the following Explanation shall
be substituted and shall be deemed to have been substituted, namely:––
‘Explanation 2.––For the purposes of this sub-section, “due date” in
respect of the persons mentioned in column B of the Table below, subject
to the conditions as mentioned in column C of the said Table, shall be the
due date of assessment year as mentioned in column D thereof:
42
TABLE
Sl.
No.
Person
Conditions
Due date
A
B
C
D
1.
Assessee,
including
the
partners of the firm or the
spouse of such partner (if
section 5A applies to such
spouse).
Where
the
provisions
of
section
92E
apply.
30th
November.
2.
(i) Company;
(ii) Assessee (other than a
company) whose accounts are
required to be audited under
this Act or under any other law
for the time being in force;
(iii) partner of a firm whose
accounts are required to be
audited under this Act or under
any other law for the time being
in force or the spouse of such
partner (if section 5A applies to
such spouse).
Where
the
provisions
of
section 92E do
not apply.
31st October.
3.
(i) Assessee having income
from profits and gains of
business or profession whose
accounts are not required to be
audited under this Act or under
any other law for the time being
in force;
(ii) partner of a firm whose
accounts are not required to be
audited under this Act or under
any other law for the time being
in force or the spouse of such
partner (if section 5A applies to
such spouse).
Where
the
provisions
of
section 92E do
not apply.
31st August.
4.
Any other assessee.
31st July.’;
(b) for sub-section (5), the following sub-section shall be substituted and
shall be deemed to have been substituted, namely:––
43
“(5) If any person, having furnished a return under sub-section (1) or
sub-section (4), discovers any omission or any wrong statement therein,
he may, subject to the provisions of section 234-I, furnish a revised return
at any time before the end of the relevant assessment year or before the
completion of the assessment, whichever is earlier.”;
(c) in sub-section (8A),––
(i) in the first proviso, in item (i), after the words “return of a loss”,
the words “except in a case referred to in the sixth proviso” shall be
inserted;
(ii) in the third proviso, in item (b), after the words “in his case”, the
words “except in a case referred to in the eighth proviso” shall be inserted;
(iii) in the sixth proviso, after the words “return of income”, the words
“or such updated return has the effect of reducing the loss” shall be
inserted;
(iv) after the seventh proviso, the following proviso shall be inserted,
namely:––
“Provided also that an updated return may be furnished by a
person for the relevant assessment year in pursuance of a notice under
section 148 within such period as specified in the said notice and in
such a case, the assessee shall be precluded from filing return in
pursuance of the said notice in any other manner.”.
Amendment
of section
140B.
6. In section 140B of the Income-tax Act, after sub-section (3), the
following sub-section shall be inserted and shall be deemed to have been
inserted with effect from the 1st day of March, 2026, namely:––
“(3A) Where an updated return is filed in pursuance of a notice issued
under section 148 within the period specified in the said notice, the additional
income-tax payable under sub-section (3) shall be increased by a further sum
of ten per cent. of the aggregate of tax and interest payable, as determined in
sub-section (1) or sub-section (2), as the case may be.”.
Amendment
of section
144C.
7. In section 144C of the Income-tax Act,––
(a) after sub-section (4), the following sub-section shall be inserted
and shall be deemed to have been inserted with effect from the 1st day
of April, 2009, namely:––
44
“(4A) Notwithstanding anything contained in any judgment,
order or decree of any court, or section 153, for the removal of
doubts, it is hereby clarified for the purposes of sub-section (4) that
where a draft of the proposed order of assessment under sub-
section (1) is forwarded within the time period allowed under
section 153, further time period available to the Assessing Officer
to complete the assessment under sub-section (3) shall be governed
and shall always be deemed to have been governed by the
provisions of sub-section (4).”;
(b) after sub-section (4A) as so inserted, the following sub-section
shall be inserted and shall be deemed to have been inserted with effect
from the 1st day of October, 2009, namely: ––
“(4B) Notwithstanding anything contained in any judgment,
order or decree of any court, or section 153B, for the removal of
doubts, it is hereby clarified for the purposes of sub-section (4) that
where a draft of the proposed order of assessment under sub-
section (1) is forwarded within the time period allowed under
section 153B, further time period available to the Assessing
Officer to complete the assessment under sub-section (3) shall be
governed and shall always be deemed to have been governed by
the provisions of sub-section (4).”;
(c) after sub-section (13), the following sub-section shall be
inserted and shall be deemed to have been inserted with effect from the
1st day of April, 2009, namely:––
“(13A) Notwithstanding anything contained in any judgment,
order or decree of any court, or section 153, for the removal of
doubts, it is hereby clarified for the purposes of sub-section (13)
that where a draft of the proposed order of assessment under sub-
section (1) is forwarded within the time period allowed under
section 153, time period available for the Assessing Officer under
sub-section (13) to pass the assessment order upon receipt of the
direction issued under sub-section (5), shall be governed and shall
always be deemed to have been governed by the provisions of sub-
sections (12) and (13).”;
(d) after sub-section (13A) as so inserted, the following sub-section
shall be inserted and shall be deemed to have been inserted with effect
from the 1st day of October, 2009, namely:––
45
“(13B) Notwithstanding anything contained in any judgment, order
or decree of any court, or section 153B, for the removal of doubts, it is
hereby clarified for the purposes of sub-section (13) that where a draft
of the proposed order of assessment under sub-section (1) is forwarded
within the time period allowed under section 153B, time period
available for the Assessing Officer under sub-section (13) to pass the
assessment order upon receipt of the direction issued under sub-section
(5), shall be governed and shall always be deemed to have been
governed by the provisions of sub-sections (12) and (13).”.
Insertion of
new section
147A.
8. After section 147 of the Income-tax Act, the following section shall
be inserted and shall be deemed to have been inserted with effect from the 1st
day of April, 2021, namely:––
Assessing
Officer for
purposes of
sections 148
and 148A.
“147A. Notwithstanding anything contained in any judgement, order
or decree of any court or in section 151A or in any scheme framed
thereunder, for the removal of doubts, it is hereby clarified that the
Assessing Officer for the purposes of sections 148 and 148A shall mean
and shall always be deemed to have meant to be an Assessing Officer other
than the National Faceless Assessment Centre or any assessment unit
referred to in sub-section (3) of section 144B.”.
Amendment
of section
153.
9. In section 153 of the Income-tax Act, after sub-section (9), the
following sub-section shall be inserted and shall be deemed to have been
inserted with effect from the 1st day of April, 2009, namely:––
“(10) Notwithstanding anything contained in any judgment, order or
decree of any court, for the removal of doubts, it is hereby clarified that
in terms of provisions of sub-sections (1) to (4), the draft of the proposed
order of assessment referred to in sub-section (1) of section 144C shall be
made, and shall always be deemed to have been made, at any time up to
the time limit of assessment, reassessment or recomputation referred to in
the said sub-sections.”.
Amendment
of section
153B.
10. In section 153B of the Income-tax Act, after sub-section (1), the
following sub-section shall be inserted and shall be deemed to have been
inserted with effect from the 1st day of October, 2009, namely:––
“(1A) Notwithstanding anything contained in any judgment, order
or decree of any court, for the removal of doubts, it is hereby clarified
that in terms of provisions of this section, the draft of the proposed order
of assessment referred to in sub-section (1) of section 144C shall be
made, and shall always be deemed to have been made, at any time up to
46
the time limit of assessment, reassessment or recomputation referred to
in this section.”.
Amendment
of
section
220.
11. In section 220 of the Income-tax Act, 1961, in sub-section (2), after
the third proviso, the following proviso shall be inserted and shall be deemed
to have been inserted with effect from the 1st day of March, 2026, namely:–
–
“Provided also that no interest shall be charged under this sub-section
in respect of any demand raised on account of penalty levied under section
270A––
(a) up to the date of passing of the order under section 250;
(b) up to the date of passing of the order under section 254, where the
assessment or reassessment has been made in pursuance to directions
issued by the Dispute Resolution Panel under section 144C.”.
Insertion of
new section
234-I.
12. After section 234H of the Income-tax Act, the following section shall
be inserted and shall be deemed to have been inserted, with effect from the
1st day of March, 2026, namely:––
Fee
for
furnishing
revised
return
of
income.
“234-I. Without prejudice to the provisions of this Act, where any
person furnishes a return of income under sub-section (5) of section 139,
beyond nine months but before twelve months from the end of the relevant
assessment year, he shall pay by way of a fee,––
(a) a sum of one thousand rupees, if the total income of such person
does not exceed five lakh rupees;
(b) a sum of five thousand rupees, in any other case.”.
Amendment
of
section
245MA.
13. In section 245MA of the Income-tax Act, in sub-section (2), for the
words “waive any penalty imposable”, the words “waive any penalty imposed
or imposable” shall be substituted and shall be deemed to have been
substituted with effect from the 1st day of March, 2026.
Amendment
of
section
270A.
14. In section 270A of the Income-tax Act, after sub-section (11), the
following sub-section shall be inserted and shall be deemed to have been
inserted with effect from the 1st day of March, 2026, namely:––
“(11A) Where additional income-tax is paid in accordance with sub-
section (3A) of section 140B, the income on which such additional
income-tax is paid shall not form the basis of imposition of penalty under
this section.”.
47
Amendment
of section
270AA.
15. In section 270AA of the Income-tax Act, for sub-sections (1) to (3),
the following sub-sections shall be substituted and shall be deemed to have
been substituted with effect from the 1st day of March, 2026, namely:––
“(1) An assessee may make an application to the Assessing Officer to
grant immunity from imposition or, as the case may be, waiver of penalty
under section 270A and immunity from initiation of proceedings under
section 276C or section 276CC, if he fulfils the following conditions,
namely: —
(a) the tax and interest payable as per the order of assessment
under sub-section (3) of section 143 or reassessment under section
147 has been paid within the period specified in the notice of demand;
(b) where penalty has been levied or, as the case may be, leviable
under the circumstances referred to in sub-section (9) of section 270A,
additional income-tax amounting to one hundred per cent. of the
amount of tax payable on under-reported income has been paid within
the period specified in the notice of demand, in lieu of such penalty;
and
(c) no appeal has been filed against the order referred to in clauses
(a) and (b).
(2) An application referred to in sub-section (1) shall be made within
one month from the end of the month in which the order referred to in
clause (a) and clause (b) of the said sub-section has been received by the
assessee, in such form and verified in such manner, as may be prescribed.
(3) The Assessing Officer shall, on fulfilment of the conditions
specified in sub-section (1) and after the expiry of the period of filing the
appeal as specified in clause (b) of sub-section (2) of section 249, grant
immunity from imposition or, as the case may be, waiver of penalty under
section 270A and initiation of proceedings under section 276C or section
276CC.
(3A) No immunity or, as the case may be, waiver under sub-section
(3) shall be granted where any proceedings has been initiated under
Chapter XXII.”.
Amendment
of section
274.
16. In section 274 of the Income-tax Act, with effect from the 1st day of
March, 2026,––
(a) in sub-section (1), after the words “a reasonable opportunity of
being heard”, the words “by way of a show cause notice to that effect”
shall be inserted and shall be deemed to have been inserted;
48
(b) after sub-section (3), the following sub-sections shall be inserted
and shall be deemed to have been inserted, namely:––
“(4) Notwithstanding anything contained in any other provision of
this Act, where any draft of the proposed order of assessment under
section 144C or assessment under section 143 or reassessment under
section 147 is made on or after 1st of April, 2027 in respect of the
assessment year 2026-2027 or any earlier assessment year,––
(a) the penalty under section 270A, if any, shall constitute part
of such draft assessment or shall be imposed as a part of such order
of assessment or reassessment, as the case may be; and
(b) the reference to the assessment order or the penalty order
under section 270A in any of the provisions of this Act shall take
reference to such order of assessment or reassessment, as the case
may be.
(5) Where the approval of the Joint Commissioner is taken for passing
of an order of assessment or reassessment on or after the 1st April, 2027,
such approval shall also be deemed to be the approval for the imposition
of penalty under section 270A, if any, constituting part of such order of
assessment or reassessment.”.
Amendment
of section
275A.
17. In section 275A of the Income-tax Act, with effect from the 1st day
of March, 2026,––
(a) for the marginal heading, the following marginal heading shall be
substituted and shall be deemed to have been substituted, namely:––
“Contravention of order made during search action.”;
(b) for the words “rigorous imprisonment which may extend to two
years and shall also be liable to fine”, the words “simple imprisonment
for a term up to two years and with fine” shall be substituted and shall be
deemed to have been substituted.
Amendment
of section
275B.
18. In section 275B of the Income-tax Act, with effect from the 1st day of
March, 2026,––
(a) for the marginal heading, the following marginal heading shall be
substituted and shall be deemed to have been substituted, namely:––
“Failure to afford facility for inspection of books of account
during search.”;
49
(b) for the words “rigorous imprisonment for a term which may extend
to two years and shall also be liable to fine”, the words “simple
imprisonment for a term up to six months, or with fine, or with both” shall
be substituted and shall be deemed to have been substituted.
Amendment
of section
276.
19. In section 276 of the Income-tax Act, for the words “rigorous
imprisonment for a term which may extend to two years and shall also be
liable to fine”, the words “simple imprisonment for a term up to two years
and with fine” shall be substituted and shall be deemed to have been
substituted with effect from the 1st day of March, 2026.
Substitution
of
new
sections for
sections
276B,
276BB,
276C,
276CC,
276CCC and
276D.
20. For sections 276B, 276BB, 276C, 276CC, 276CCC and 276D of the
Income-tax Act, the following sections shall be substituted and shall be
deemed to have been substituted with effect from the 1st day of March, 2026,
namely:––
Failure to pay
tax to credit
of
Central
Government
under
Chapter XII-
D or XVII-B.
“276B. If a person fails to—
(a) pay to the credit of the Central Government, the tax deducted at
source by him as required by or under the provisions of Chapter XVII-
B; or
(b) pay tax or ensure payment of tax to the credit of the Central
Government, as required by or under—
(i) the proviso to sub-section (1) of section 194S in relation to
consideration for transfer of virtual digital asset, excluding such
consideration which is wholly in kind; or
(ii) sub-section (2) of section 194BA in relation to winnings,
excluding such winnings which are wholly in kind,
he shall be punishable––
(i) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of such tax exceeds fifty lakh rupees; or
(ii) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount of such tax exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
(iii) with fine, in any other case:
50
Provided that the provisions of this section shall not apply, if the
payment referred to in clause (a) has been made to the credit of the
Central Government at any time on or before the time prescribed for
filing the statement for such payment under sub-section (3) of section
200.
Failure to
pay tax
collected at
source.
276BB. If a person fails to pay to the credit of the Central
Government, the tax collected by him as required under the provisions of
section 206C, he shall be punishable––
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of such tax exceeds fifty lakh
rupees; or
(b) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount of such tax exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that the provisions of this section shall not apply if the
payment of the tax collected at source has been made to the credit of the
Central Government at any time on or before the time prescribed for
filing the statement under the proviso to sub-section (3) of section 206C
in respect of such payment.
Wilful
attempt to
evade tax,
etc.
276C. (1) If a person wilfully attempts in any manner to evade any
tax, penalty or interest chargeable or imposable, or under-reports his
income, under this Act, he shall, without prejudice to any penalty that may
be imposable on him under any other provision of this Act, be punishable
—
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount sought to be evaded or tax on
under-reported income exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount sought to be evaded or tax on
under-reported income exceeds ten lakh rupees but does not exceed
fifty lakh rupees; or
(c) with fine, in any other case.
(2) If a person wilfully attempts in any manner to evade the payment
of any tax, penalty or interest under this Act, he shall, without prejudice
51
to any penalty that may be imposable on him under any other provision
of this Act, be punishable —
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount sought to be evaded exceeds fifty
lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount sought to be evaded exceeds ten
lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.
Explanation.—For the purposes of this section, a wilful attempt to
evade any tax, penalty or interest chargeable or imposable under this Act
or the payment thereof shall include a case where any person—
(a) has in his possession or control any books of account or other
documents (being books of account or other documents relevant to any
proceeding under this Act) containing a false entry or statement; or
(b) makes or causes to be made any false entry or statement in such
books of account or other documents; or
(c) wilfully omits or causes to be omitted any relevant entry or
statement in such books of account or other documents; or
(d) causes any other circumstance to exist which shall have the
effect of enabling such person to evade any tax, penalty or interest
chargeable or imposable under this Act or the payment thereof.
Failure to
furnish
returns of
income.
276CC. If a person wilfully fails to furnish in due time the return of
fringe benefits, which he is required to furnish under sub-section (1) of
section 115WD, or by notice given under sub-section (2) of the said
section or section 115WH, or the return of income which he is required
to furnish under sub-section (1) of section 139, or by notice given under
clause (i) of sub-section (1) of section 142, or section 148, or section
153A, he shall be punishable —
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of tax, which would have been
evaded if the failure had not been discovered, exceeds fifty lakh rupees;
or
(b) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount of tax, which would have been
52
evaded if the failure had not been discovered, exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that a person shall not be proceeded against under this
section for failure to furnish in due time the return of fringe benefits
under sub-section (1) of section 115WD or return of income under sub-
section (1) of section 139—
(i) for any assessment year commencing prior to the 1st day of
April, 1975; or
(ii) for any assessment year commencing on or after the 1st day of
April, 1975, if—
(a) the return is furnished by him before the expiry of the
assessment year or a return is furnished by him under sub-section
(8A) of section 139 within the time provided in that sub-section; or
(b) the tax payable by such person, not being a company, on the
total income determined on regular assessment, as reduced by the
advance tax or self-assessment tax, if any, paid before the expiry of
the assessment year, and any tax deducted or collected at source,
does not exceed ten thousand rupees.
Failure to
furnish
return of
income in
search cases.
276CCC. If a person wilfully fails to furnish in due time the return of
income, setting forth his undisclosed income for the block period, which
he is required to furnish by notice given under clause (a) of sub-section
(1) of section 158BC, he shall be punishable —
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of tax exceeds fifty lakh rupees; or
(b) with simple imprisonment up to six months, or with fine, or with
both, where the amount of tax exceeds ten lakh rupees but does not
exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that no person shall be punishable for any failure under
this section in respect of search initiated under section 132 or books of
account, other documents or any assets requisitioned under section
132A, after the 30th day of June, 1995 but before the 1st day of January,
1997.
53
Failure
to
comply with
a direction of
special audit
or valuation.
276D. If a person wilfully fails to comply with a direction issued to
him under sub-section (2A) of section 142, he shall be punishable with
simple imprisonment for a term up to six months, or with fine, or with
both.”.
Amendment
of
section
277.
21. In section 277 of the Income-tax Act, for clauses (i) and (ii), the
following clauses shall be substituted and shall be deemed to have been
substituted with effect from the 1st day of March, 2026, namely:––
“(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of tax, which would have been evaded if
the statement or account had been accepted as true, exceeds fifty lakh
rupees; or
(b) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount of tax, which would have been evaded if
the statement or account had been accepted as true, exceeds ten lakh
rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.”.
Amendment
of section
277A.
22. In section 277A of the Income-tax Act, for the words “rigorous
imprisonment for a term which shall not be less than three months but which
may extend to two years and with fine”, the words “simple imprisonment for
a term up to two years and with fine” shall be substituted and shall be deemed
to have been substituted with effect from the 1st day of March, 2026.
Amendment
of section
278.
23. In section 278 of the Income-tax Act, for clauses (i) and (ii), the
following clauses shall be substituted and shall be deemed to have been
substituted with effect from the 1st day of March, 2026, namely:––
“(i) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of tax, penalty or interest which would have
been evaded, if the declaration, account or statement had been accepted as
true, or which is wilfully attempted to be evaded, exceeds fifty lakh rupees;
or
(ii) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount of tax, penalty or interest which would have
been evaded, if the declaration, account or statement had been accepted as
true, or which is wilfully attempted to be evaded, exceeds ten lakh rupees but
does not exceed fifty lakh rupees; or
(iii) with fine, in any other case.”.
54
Amendment
of section
278A.
24. In section 278A of the Income-tax Act, with effect from the 1st day
of March, 2026,––
(a) for the word “rigorous”, the word “simple” shall be substituted and
shall be deemed to have been substituted;
(b) for the word “seven”, the word “three” shall be substituted and
shall be deemed to have been substituted.
Amendment
of section
280.
25. In section 280 of the Income-tax Act, in sub-section (1), for the words
“imprisonment which may extend to six months, and shall also be liable to
fine”, the words “simple imprisonment up to one month, or with fine, or with
both” shall be substituted and shall be deemed to have been substituted with
effect from the 1st day of March, 2026.
Insertion of
new section
292BA.
26. After section 292B of the Income-tax Act, the following section shall
be inserted, namely:––
Assessments
not to be
invalid on
certain
grounds.
“292BA. Notwithstanding anything contained in any judgment, order
or decree of any court, for the removal of doubts, it is hereby clarified for
the purposes of section 292B that no assessment under any of the
provisions of this Act shall be invalid or shall be deemed to have been
invalid on the ground of any mistake, defect or omission in respect of
quoting of a computer generated Document Identification Number, if the
assessment order is referenced by such number in any manner.”.
B.–– Income-tax under the Income-tax Act, 2025
Amendment
of section 2.
27. In section 2 of the Income-tax Act, 2025 (hereafter in this Part referred
to as the Income-tax Act),––
30 of 2025.
(a) for clause (32), the following clause shall be substituted, namely:––
‘(32) “co-operative society” means a co-operative society registered
under the Co-operative Societies Act, 1912, or the Multi-State Co-
operative Societies Act, 2002, or under any other law in force in any
State or Union territory for the registration of co-operative societies;’;
2 of 1912.
39 of 2002.
(b) in clause (40),––
(A) sub-clause (f) shall be omitted;
(B) in the first long line below sub-clause (f) as so omitted, for sub-
clause (v), the following sub-clause shall be substituted, namely:––
55
‘(v) any advance or loan between two group entities, where,––
(A) one of the group entities is a “Finance Company” or a
“Finance Unit”;
(B) the other group entity to the transaction is located in a
country or territory outside India; and
(C) the parent entity or the principal entity of such group is
listed on the stock exchange in a country or territory outside India,
for the purposes of items (B) and (C), the country or territory
outside India shall be specified by the Central Government, by
notification,’;
(b) in the second long line below sub-clause (v), in sub-clause (E), for
item (II), the following items shall be substituted, namely:––
‘(II) “group entity” shall have the same meaning as assigned to the
expression “group entities” in clause (m) of sub-regulation (1) of
regulation 2 of the International Financial Services Authority
(Payment Services) Regulations, 2024 made under the International
Financial Services Centres Authority Act, 2019;
50 of 2019.
(III) “parent entity” or “principal entity” in relation to one or more
other group entities, shall be an entity of which other group entities
are subsidiary and such entity,–
(a) exercises or controls more than one-half of the total voting
power either at its own or together with one or more of its
subsidiaries; or
(b) controls the composition of the Board of Directors;’.
Amendment
of section 7.
28. In section 7 of the Income-tax Act, in sub-section (2), in clause (a),
for the brackets and letter “(f)”, the brackets and letter “(e)” shall be
substituted.
Amendment
of section
21.
29. In section 21 of the Income-tax Act, in sub-section (5), for the words
“nil for”, the word “nil up to” shall be substituted.
56
Amendment
of section
22.
30. In section 22 of the Income-tax Act, in sub-section (2), for the word,
brackets, figure and letter “sub-section (1)(b)”, the words, brackets, figure
and letters “sub-section (1)(b) and (c)” shall be substituted.
Amendment
of section
29.
31. In section 29 of the Income-tax Act, in sub-section (1), for clause (e),
the following clause shall be substituted, namely:—
“(e) the amount of contribution received from an employee to which
the provisions of section 2(49)(o) apply, if it is credited by the assessee to
the account of the employee in the relevant fund or funds, on or before
the due date of filing of return of income under section 263(1) for the tax
year.”.
Amendment
of section
58.
32. In section 58 of the Act, in sub-section (11), in clause (a), sub-clause
(i) shall be omitted.
Amendment
of section
66.
33. In section 66 of the Income-tax Act, for clause (4), the following
clause shall be substituted, namely:—
‘(4) “commodities transactions tax” and “commodity derivative” shall
have the same meanings as respectively assigned to them in Chapter VII
of the Finance Act, 2013;’.
17 of 2013.
Amendment
of section
69.
34. In section 69 of the Income-tax Act, for sub-sections (2) and (3), the
following sub-sections shall be substituted, namely:–
‘(2) In respect of capital gains referred to in sub-section (1), where the
shareholder or holder of other specified securities is a promoter, the
aggregate income-tax payable on such capital gains shall be––
(a) the income-tax payable on such capital gains in accordance with
the provisions of this Act; and
(b) an additional income tax in respect of capital gains specified in
column B of the Table below, computed at the rate specified in column
C or column D of the said Table.
TABLE
Sl.
No.
Income
Rate, where
the promoter
is a domestic
company
Rate, where
the promoter
is other than
a
domestic
company
57
A
B
C
D
1.
Short-term capital gains referred
to in section 196 arising from the
transfer of such securities.
2%
10%
2.
Long-term capital gains referred
to in section 197 or section 198
arising from the transfer of such
securities.
9.5%
17.5%
(3) For the purposes of this section,—
(a) in the case of a company whose shares are listed on a
recognised stock exchange in India, ‘promoter’ shall have the same
meaning as assigned to it in regulation 2(k) of the Securities and
Exchange Board of India (Buy-Back of Securities) Regulations, 2018
made under the Securities and Exchange Board of India Act, 1992;
15 of 1992.
(b) in any other case, “promoter” means,––
(i) a “promoter” as defined in section 2(69) of the Companies
Act, 2013; or
18 of 2013.
(ii) a person who holds, directly or indirectly, more than 10%
of the shareholding in the company;
(c) “specified securities” shall have the same meaning as assigned
to it in Explanation 1 to section 68 of the Companies Act, 2013.’.
18 of 2013.
Amendment
of section
70.
35. In section 70 of the Income-tax Act, in sub-section (1), for clause (x),
the following clause shall be substituted, namely:––
“(x) by way of redemption, of Sovereign Gold Bond issued by the
Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015 or
any subsequent Sovereign Gold Bond Scheme, if held by an individual from
the date of original issue till maturity;”.
Amendment
of section
93.
36. In section 93 of the Income-tax Act,––
(a) in sub-section (1), for clause (a), the following clause shall be
substituted, namely:––
“(a) for interest on securities, any reasonable sum paid as
commission or remuneration to a banker or any other person for the
purpose of realising such interest on behalf of the assessee;”;
58
(b) for sub-section (2), the following sub-section shall be substituted,
namely:––
“(2) Irrespective of anything contained in sub-section (1), in respect
of any dividend income or income from units of a Mutual Fund
specified under Schedule VII (Table: Sl. No. 20 or 21) or income from
units of a specified company as referred to in section 2(h) of the Unit
Trust of India (Transfer of Undertaking and Repeal) Act, 2002, no
deduction shall be allowed.”.
58 of 2002.
Amendment
of section
99.
37. In section 99 of the Income-tax Act, in sub-section (2), for the words,
brackets, figures and letters “sub-section (1)(a)(i) or (b)”, the words, brackets,
figures and letters “sub-section (1)(a)(ii) or (b)” shall be substituted.
Amendment
of section
147.
38. In section 147 of the Income-tax Act,––
(a) for sub-section (2), the following sub-section shall be substituted,
namely:––
“(2) Irrespective of anything contained in section 80LA of the Income-
tax Act, 1961, the deduction shall be allowed––
(a) for twenty consecutive tax years beginning from the relevant tax
year in the case of an entity mentioned in sub-section (1)(a);
(b) for twenty consecutive tax years out of twenty-five years
beginning from the relevant tax year, at the option of an assessee, in the
case of an entity mentioned in sub-section (1)(b).”;
(b) for sub-section (5), the following sub-sections shall be substituted,
namely:––
‘(5) In respect of any Offshore Banking Unit or any other unit referred
in sub-section (1), commencing operations on or after the 1st April, 2026, the
deduction under sub-section (1) shall be available only if such unit is not
formed by splitting up or reconstruction or reorganisation or transfer of a
business already in existence in India;
(6) For the purposes of this section,—
(a) “relevant tax year” shall be,—
(i) in case of an entity referred to in sub-section (1)(a), the tax year in
which permission under section 23(1)(a) of the Banking Regulation Act,
1949, or permission or registration under the Securities and Exchange Board
of India Act, 1992 or any other relevant law in force was obtained; or
(ii) in case of an entity referred to in sub-section (1)(b), the tax year in
which permission under section 23(1)(a) of the Banking Regulation Act,
1949, or permission or registration under the Securities and Exchange Board
43 of 1961.
10 of 1949.
15 of 1992.
10 of 1949.
15 of 1992.
59
of India Act, 1992, or permission or registration under the International
Financial Services Centres Authority Act, 2019 was obtained;
(b) “Unit” shall have the same meaning as assigned to it in section 2(zc)
of the Special Economic Zones Act, 2005;
(c) “aircraft” and “ship” shall have the meanings respectively assigned
to them in Schedule VI (Note 3).’.
50 of 2019.
28 of 2005.
Amendment
of section
149.
39. In section 149 of the Income-tax Act,––
(a) in sub-section (2),––
(i) in clause (b), after the word “oilseeds,” wherever it occurs, the
words “cotton seed, cattle feed,” shall be inserted;
(ii) for clause (d), the following clause shall be substituted, namely:–
“(d) in respect of any income derived by the co-operative society
from its investments with any other co-operative society by way of–
(i) interest; or
(ii) dividends,
the whole of such income;”;
(b) after sub-section (5), the following sub-section shall be inserted,
namely:––
‘(6) For the purposes of this section,––
(a) “consumers’ co-operative society” means a society for the
benefit of the consumers;
(b) “primary agricultural credit society” has the same meaning
as assigned to it in Part V of the Banking Regulation Act, 1949; and
10 of 1949.
(c) “primary co-operative agricultural and rural development
bank” means a society having an area of operation confined to a
taluk, the principal object of which is to provide long-term credit for
agricultural and rural development activities.’.
Substitution
of
new
section
for
section 150.
40. For section 150 of the Income-tax Act, the following section shall be
substituted, namely:––
60
Deduction in
respect of
income of
federal co-
operative.
‘150. (1) If the gross total income of an assessee being a federal co-
operative, in any tax year, includes any income by way of dividends
received from its investment with any company, a deduction shall be
allowed from such income, to the extent of the amount which,––
(a) has arisen from such investment as recorded in its books of
account on or before the 31st January, 2026; and
(b) has been distributed by it to its members at least one month
before the due date for filing the return of income under section 263(1).
(2) The provisions of this section shall not apply to any tax year
beginning on or after the 1st April, 2029.
(3) For the purposes of this section, “federal co-operative” means a
“federal co-operative” as defined in section 3(k) of the Multi-State Co-
operative Societies Act, 2002 and notified as such by the Central
Government.’.
39 of 2002.
Amendment
of section
162.
41. In section 162 of the Income-tax Act, in sub-section (2), for clause
(c), the following clause shall be substituted, namely:—
“(c) other units, undertakings, enterprises or business of such
assessee, or other person referred to in section 140(13) in respect of
transactions referred to in Chapter VIII, to which the provisions of section
140(9) or (13) of this Act or section 80-IA(8) or (10) of the Income-tax
Act, 1961 are applicable.”.
43 of 1961.
Amendment
of section
164.
42. In section 164 of the Income-tax Act, in clause (d), the words and
figures “or section 144” shall be omitted.
Amendment
of section
165.
43. In section 165 of the Income-tax Act, 2025, in sub-section (7), the
words and figures “under section 144 or” shall be omitted.
Amendment
of section
166.
44. In section 166 of the Income-tax Act, for sub-section (7), the
following sub-section shall be substituted, namely:––
“(7) Where a reference was made under sub-section (1), an order under
sub-section (6) may be made at any time before one month prior to the
month in which period of limitation referred to in section 286 or 296, for
making the order of assessment or reassessment or recomputation or fresh
assessment, expires and accordingly, where such period expires on––
61
(a) the 31st March of any year, the order under sub-section (6) shall be
made on or before the 31st January of that year;
(b) the 31st December of any year, the order under sub-section (6) shall
be made on or before the 31st October of that year.”.
Amendment
of section
169.
45. In section 169 of the Income-tax Act, for sub-section (1), the
following sub-section shall be substituted, namely:––
“(1) Irrespective of anything to the contrary contained in section 263,
where an income is modified as a result of advance pricing agreement
entered into with any person then, such person shall, or any other person
being an associated enterprise may,–
(a) furnish a return or a modified return in accordance with and
limited to the agreement; and
(b) the time period for furnishing such return or modified return
shall be three months from the end of the month in which the agreement
was entered into,
where the tax years relevant for such return or modified return shall be
the years covered by such agreement.”.
Amendment
of section
195.
46. In section 195 of the Income-tax Act, in sub-section (1), in the
longline, in clause (i), for the figures and symbol “60%”, the figures and
symbol “30%” shall be substituted.
Amendment
of section
202.
47. In section 202 of the Income-tax Act, in sub-section (2), in clause (a),
sub-clause (iii) shall be omitted.
Amendment
of
section
203.
48. In section 203 of the Income-tax Act,––
(a) in sub-section (1), in clause (a), in sub-clause (i), after the word
and figures “section 146”, the word and figures “or 150” shall be inserted;
(b) after sub-section (6), the following sub-section shall be inserted,
namely:––
“(7) In case of an assessee, being a co-operative society, which
has exercised option under sub-section (5), the requirements
contained in sub-section (1) shall be modified to the extent that the
deduction under section 149(2)(d)(ii) shall be available to such
assessee as does not exceed the amount of dividend distributed by it
62
to its members at least one month before the due date for filing the
return of income under section 263(1).”.
Amendment
of
section
204.
49. In section 204 of the Income-tax Act,––
(a) in sub-section (3), in clause (a), in sub-clause (i), after the word
and figures “section 146”, the word and figures “or 150” shall be inserted;
(b) after sub-section (4), the following sub-section shall be inserted,
namely:––
“(5) In case of an assessee, being a co-operative society, which has
exercised option under sub-section (2), the requirements contained in
sub-section (3) shall be modified to the extent that the deduction under
section 149(2)(d)(ii) shall be available to such assessee as does not
exceed the amount of dividend distributed by it to its members at least
one month before the due date for filing the return of income under
section 263(1).”.
Amendment
of section
206.
50. In section 206 of the Income-tax Act,––
(a) in sub-section (1),––
(i) in clause (b), in sub-clause (ii), for the figures and symbol “15%”,
the figures and symbol “14%” shall be substituted;
(ii) in clause (i), for sub-clause (ii), following sub-clause shall be
substituted, namely:––
“(ii) the assessee has not utilised the credit of tax paid under section
115JAA of the Income-tax Act, 1961, in any subsequent tax year ending
on or before the 31st March, 2026,”;
43 of 1961.
(iii) in clause (l), in sub-clause (iii), the brackets, words, letters and
figures “(Table: Sl. Nos. 1, 3, 4 and 5)” shall be omitted;
(iv) clauses (m), (n), (o) and (p) shall be omitted;
(v) in clause (q), in the opening portion, for the word “section”, the
word “sub-section” shall be substituted;
(vi) clause (r) shall be omitted;
(vii) in clause (s), for the words “which this section”, the words
“which this sub-section” shall be substituted;
63
(b) for sub-section (3), the following sub-sections shall be substituted,
namely:––
“(3) (a) The provisions of this sub-section shall be applicable only to
an assessee, being a domestic company, that has exercised the option
under section 200(5) or section 201(2) for a tax year, beginning on or after
the 1st April 2026.
(b) Where any amount of credit, in respect of tax paid, was allowed to
be carried forward to the assessee under the provisions of section 115JAA
of the Income-tax Act, 1961, as on 31st March, 2026,––
43 of 1961.
(i) such credit brought forward shall be allowed to be set off in
any tax year to the extent of 25% of the tax payable on the total income
computed as per the other provisions of this Act for that tax year;
(ii) the remaining credit shall be carried forward to the subsequent
tax year; and
(iii) such carry forward or set off of tax credit shall not be allowed
beyond the fifteenth tax year immediately succeeding the tax year in
which the tax credit first became allowable under section 115JAA of
the Income-tax Act, 1961.
43 of 1961.
(c) Where, as a result of any order passed under this Act, tax payable
under this Act is decreased or increased, as the case may be, tax credit
allowed to be set off under clause (b) shall also be decreased or increased,
accordingly.
(d) In case of conversion of a private company or unlisted public
company into a limited liability partnership under the Limited Liability
Partnership Act, 2008, the provisions of clauses (a) and (b) shall not apply
to the successor limited liability partnership.
6 of 2009.
(4) (a) The provisions of this sub-section shall be applicable only to
an assessee, being a foreign company.
(b) Where, any amount of credit in respect of tax paid was allowed to
be carried forward to the assessee under the provisions of section 115JAA
of the Income-tax Act, 1961, as on 31st March, 2026,––
43 of 1961.
(i) such tax credit shall be carried forward and set off in a tax year,
when tax payable on the total income computed as per the provisions of
this Act exceeds the minimum alternate tax computed as per provisions
of sub-section (1);
64
(ii) such set off in respect of brought forward tax credit shall be
allowed for any tax year to the extent of the difference between the tax
liability on the total income computed as per the other provisions of this
Act and the minimum alternate tax for that tax year; and
(iii) such carry forward or set off of tax credit shall not be allowed
beyond the fifteenth tax year immediately succeeding the tax year in
which the tax credit first became allowable under section 115JAA of
the Income-tax Act, 1961.
43 of 1961.
(c) Where, as a result of any order passed under this Act, tax payable
under this Act is decreased or increased, as the case may be, tax credit
allowed to be set off under clause (b) shall also be decreased or increased,
accordingly.
(d) In case of conversion of a private company or unlisted public
company into a limited liability partnership under the Limited Liability
Partnership Act, 2008, the provisions of clauses (a) and (b) shall not apply
to the successor limited liability partnership.
6 of 2009.
(5) Save as otherwise provided in this section, all other provisions of
this Act shall apply to every assessee mentioned in this section.”.
Substitution
of
new
sections for
sections 217
and 218.
51. For sections 217 and 218 of the Income-tax Act, the following
sections shall be substituted, namely:––
Application
of benefits
under
sections 212
to 216.
“217. (1) Where a non-resident Indian in any tax year,––
(a) becomes assessable as a resident in India in respect of total income
in a subsequent year; and
(b) furnishes a declaration in writing to the Assessing Officer along
with his return of income under section 263 for the tax year for which he
is so assessable, to the effect that provisions of sections 212 to 216 shall
continue to apply to him in relation to the investment income derived from
any foreign exchange asset referred to in section 212(e) other than shares
in an Indian company, then the provisions of sections 212 to 216 shall
continue to apply in relation to such income for that tax year and every
subsequent tax year until the transfer or conversion (otherwise than by
transfer) of such assets into money.
(2) A non-resident Indian may choose not to be governed by the
provisions of sections 212 to 216 for any tax year by declaring it in his return
of income under section 263 for such tax year, and if he does so,—
65
(a) the provisions of sections 212 to 216 shall not apply to him for that
tax year; and
(b) his total income for that tax year shall be computed and charged
to tax according to the other provisions of this Act.”.
Tax on
business
income of
Offshore
Banking
Units or
International
Financial
Services
Centre unit.
218. Where the total income of an assessee includes income of the nature
referred to in section 147(3), the aggregate of income-tax payable by the
assessee shall be the aggregate of income-tax computed on the income
specified in column B of the Table below at the rate specified in the
corresponding entry in column C of the said Table:
TABLE
Sl.No
Income
Rate of income-
tax payable
A
B
C
1.
Income referred to in section
147(3)
15%
2.
Total income as reduced by
income referred to in Sl. No. (1).
Rates
in
force.”.
Amendment
of section
227.
52. In section 227 of the Income-tax Act, —
(a) in sub-section (4), in clause (a), for the word “certificate”, the
words “valid certificate” shall be substituted;
(b) in sub-section (9), in clause (b), in sub-clause (iii), for the word
“certificate”, the words “certificate of registration” shall be substituted.
Amendment
of section
228.
53. In section 228 of the Income-tax Act, in sub-section (3), in clause (b),
in sub-clause (ii), in item (A), after the words “passenger ships”, the words
“or inland vessels” shall be inserted.
Amendment
of
section
232.
54. In section 232 of the Income-tax Act,––
(a) for sub-sections (12) and (13), the following sub-sections shall be
substituted, namely:––
“(12) A tonnage tax company, after its option has been approved
under section 231(4), shall comply with the minimum training
requirement as per the guidelines issued by the Director-General of
66
Shipping or the Inland Waterways Authority of India, as the case may
be, and notified by the Central Government.
(13) The tonnage tax company shall be required to furnish a copy
of the certificate issued by the Director-General of Shipping, or the
designated authority, as appointed by the respective State
Governments under the Inland Vessels Act, 2021, as the case may be,
along with the return of income under section 263 to the effect that
such company has complied with the minimum training requirement
as per the guidelines referred to in sub-section (12) for the tax year.”;
24 of 2021.
(b) in sub-section (17), after the words “Director-General of
Shipping”, the words “or Inland Waterways Authority of India, as the case
may be” shall be inserted.
Amendment
of section
235.
55. In section 235 of the Income-tax Act, after clause (f), the following
clause shall be inserted, namely:—
‘(fa) “Inland Waterways Authority of India” shall have the same
meaning as assigned to it in section 3 of the Inland Waterways Authority of
India Act, 1985;’.
82 of 1985.
Amendment
of section
262.
56. In section 262 of the Income-tax Act, in sub-section (10), in clause
(c), for the words “pertaining to business or profession”, the words
“pertaining to, business or profession, or other transactions,” shall be
substituted.
Amendment
of
section
263.
57. In section 263 of the Income-tax Act,––
(a) in sub-section (1), for clause (c), the following clause shall be
substituted, namely:––
‘(c) for the purposes of this section, “due date” in respect of the
persons mentioned in column B of the Table below, subject to
conditions as mentioned in column C of the said Table, shall be the due
date of the financial year succeeding the relevant tax year as mentioned
in column D thereof:
TABLE
Sl.
No.
Person
Conditions
Due date
A
B
C
D
1.
Assessee, including the partners
of the firm or the spouse of such
Where
the
provisions
of
30th
November.
67
partner (if section 10 applies to
such spouse).
section
172
apply.
2.
(i) Company;
(ii) Assessee (other than a
company) whose accounts are
required to be audited under this
Act or under any other law in
force;
(iii) partner of a firm whose
accounts are required to be
audited under this Act or under
any other law in force; or the
spouse of such partner (if
section 10 applies to such
spouse).
Where
the
provisions
of
section 172 do
not apply.
31st October.
3.
(i) Assessee having income
from profits and gains of
business or profession whose
accounts are not required to be
audited under this Act or under
any other law in force;
(ii) partner of a firm whose
accounts are not required to be
audited under this Act or under
any other law in force or the
spouse of such partner (if
section 10 applies to such
spouse).
Where
the
provisions
of
section 172 do
not apply.
31st August.
4.
Any other assessee.
31st July.’;
(b) for sub-section (5), the following sub-section shall be substituted,
namely:––
“(5) If any person, having furnished a return under sub-section (1)
or (4), discovers any omission or any wrong statement therein, he may,
subject to the provisions of section 428(b), furnish a revised return at
any time within twelve months from the end of the relevant tax year, or
before the completion of the assessment, whichever is earlier.”;
(c) in sub-section (6),––
68
(i) for clause (b), the following clause shall be substituted, namely:––
“(b) (i) the provisions of clause (a) shall continue to apply for a
tax year if any person has sustained a loss in the said tax year and has
furnished a return of loss within the due date specified under sub-
section (1) and the updated return is a return of income or such updated
return has the effect of reducing the loss;
(ii) the provisions of clause (a) shall also apply where an updated
return is furnished by a person for the relevant tax year in pursuance of
a notice issued under section 280 within such period as specified in the
said notice and in such a case, the assessee shall be precluded from
filing return in pursuance of the said notice in any other manner;”;
(ii) in clause (c),––
(A) in sub-clause (i), after the words “tax year”, the words, brackets,
figures and letter “except in a case referred to in sub-section (6) (b) (i)” shall
be inserted;
(B) in sub-clause (v), after the words “tax year” the words, brackets,
figures and letter “except in a case referred to in sub-section (6) (b) (ii)”
shall be inserted;
(iii) in clause (e), for the figures, brackets, letters and words “206(1)(m)
to (p) and 206(2)(e) to (h)”, the figures, brackets, letters and words
“206(2)(e) to (h) and 206(3) and (4)” shall be substituted.
Amendment
of section
266.
58. In section 266 of the Income-tax Act,––
(a) in sub-section (2), for clause (f), the following clause shall be
substituted, namely:––
“(f) any tax credit claimed to be set off as per sections 206(2)(e)
to (h) and 206(3) and (4); and”;
(b) in sub-section (4), for clause (f), the following clause shall be
substituted, namely:––
“(f) any tax credit claimed to be set off as per the provisions of
sections 206(2)(e) to (h) and 206(3) and (4).”;
(c) in sub-section (6), for clause (e), the following clause shall be
substituted, namely:––
69
“(e) any tax credit claimed to be set off as per the provisions of
sections 206(2)(e) to (h) and 206(3) and (4).”.
Amendment
of section
267.
59. In section 267 of the Income-tax Act,––
(a) in sub-section (2), for clause (f), the following clause shall be
substituted, namely:––
“(f) any tax credit claimed to be set off as per the provisions of
sections 206(2)(e) to (h) and 206(3) and (4).”;
(b) in sub-section (4), for clause (e), the following clause shall be
substituted, namely:––
“(e) any tax credit claimed, to be set off as per the provisions of
sections 206(2)(e) to (h) and 206(3) and (4) which has not been
claimed in the earlier return.”;
(c) for sub-section (5), the following sub-section shall be substituted,
namely: ––
“(5)(i) For the purposes of sub-sections (1) and (3), the additional
income-tax payable at the time of furnishing the return under section
263(6) shall be equal to, —
(a) 25% of aggregate of tax and interest payable, as determined in sub-
section (1) or (3), as the case may be, if such return is furnished after the
expiry of the time available under section 263(4) or (5) and before
completion of twelve months from the end of the financial year
succeeding the relevant tax year; or
(b) 50% of aggregate of tax and interest payable, as determined in sub-
section (1) or (3), as the case may be, if such return is furnished after the
expiry of twelve months but before completion of twenty-four months
from the end of the financial year succeeding the relevant tax year; or
(c) 60% of aggregate of tax and interest payable, as determined in sub-
section (1) or (3), as the case may be, if such return is furnished after the
expiry of twenty-four months, but before the completion of thirty-six
months, from the end of the financial year succeeding the relevant tax
year; or
(d) 70% of aggregate of tax and interest payable, as determined in sub-
section (1) or (3), as the case may be, if such return is furnished after the
expiry of thirty-six months, but before the completion of forty-eight
70
months, from the end of the financial year succeeding the relevant tax
year.
(ii) Where an updated return is filed in pursuance of a notice issued
under section 280 within the period specified in the said notice, the
additional income-tax payable under sub-section (5)(i) shall be increased
by a further sum of 10 % of the aggregate of tax and interest payable, as
determined in sub-section (1) or (3), as the case may be.”;
(d) in sub-section (7), in clause (a), for sub-clause (v), the following
sub-clause shall be substituted, namely:––
“(v) any tax credit claimed, to be set off as per sections 206(2)(e)
to (h) and 206(3) and (4), which has not been claimed in the earlier
return; and”.
Amendment
of section
270.
60. In section 270 of the Income-tax Act, in sub-section (1), in clause (a),
in sub-clause (vi), the words and figures “under section 144 or” shall be
omitted.
Amendment
of section
275.
61. In section 275 of the Income-tax Act,––
(a) for sub-section (4), the following sub-section shall be substituted,
namely:––
“(4)(a) The Assessing Officer shall, irrespective of anything
contained in section 286, pass the assessment order under sub-section
(3) within one month from the end of the month in which,—
(i) the acceptance is received; or
(ii) the period of filing of objections under sub-section (2)
expires.
(b) Irrespective of anything contained in section 286, where a
draft of the proposed order of assessment under sub-section (1) is
forwarded within the time period allowed under the said section,
further time period available to the Assessing Officer to complete
the assessment under sub-section (3) shall be governed by the
provisions of this sub-section.”;
(b) for sub-section (14), the following sub-section shall be substituted,
namely:––
71
“(14)(a) Upon receipt of the directions issued under sub-section
(5), the Assessing Officer shall, in conformity with the directions,
complete, irrespective of anything to the contrary contained in section
286, the assessment without providing any further opportunity of
being heard to the assessee, within one month from the end of the
month in which such direction is received;
(b) Irrespective of anything contained in section 286, where a
draft of the proposed order of assessment under sub-section (1) is
forwarded within the time period allowed under section 286, time
period available for the Assessing Officer under this sub-section to
pass the assessment order upon receipt of the direction issued under
sub-section (5), shall be governed by the provisions of sub-section
(13) and this sub-section.”.
Amendment
of
section
279.
62. In section 279 of the Income-tax Act, after sub-section (2), the
following sub-section shall be inserted, namely: ––
‘(3) The “Assessing Officer” for the purposes of sections 280 and
281 shall mean to be an Assessing Officer other than the National
Faceless Assessment Centre or any assessment unit referred to in section
273(3).’.
Amendment
of section
286.
63. In section 286 of the Income-tax Act, for sub-section (2), the
following sub-section shall be substituted, namely:––
“(2)(a) Time limit for completion of any assessment or
reassessment as provided in sub-section (1) [Table: Sl No. 1 to 4], in a
case where reference is made to the Transfer Pricing Officer for
determining the arm’s length price under section 166(1), shall be
extended by an additional period of twelve months.
(b) In terms of provisions of sub-section (1) [Table: Sl No. 1 to 4]
and this sub-section, the draft of the proposed order of assessment
referred to in section 275 shall be made at any time up to the time limit
of assessment, reassessment or recomputation referred to in the said
Table and this sub-section.”.
Amendment
of section
295.
64. In section 295 of the Income-tax Act, in sub-section (2), after clause
(b), the following clauses shall be inserted, namely:––
“(c) where the undisclosed income of the other person pertains only
to the period––
72
(i) commencing from the tax year (herein referred to as the specified
year) immediately preceding the year of initiation of search or
requisition; and
(ii) ending on the date of initiation of search or making of
requisition,
then irrespective of the provisions of section 301(a), the block period in
respect of such other person shall comprise of the specified year and the
period starting from the 1st April of the tax year in which search was
initiated or requisition was made and ending on the date of the execution
of the last of the authorisations for such search or such requisition;
(d) where the undisclosed income of the other person pertains to a
single tax year out of the five tax years preceding the specified year, then
irrespective of the provisions of section 301(a), the block period in respect
of such other person shall comprise of only that single tax year.”.
Amendment
of section
296.
65. In section 296 of the Income-tax Act, for sub-section (1), the
following sub-section shall be substituted, namely:––
“(1) Irrespective of the provisions of section 286, the order under
section 294 shall be passed within eighteen months from the end of the
quarter in which the search was initiated or requisition was made.”.
Amendment
of section
332.
66. In section 332 of the Income-tax Act, in sub-section (1), in clause (f),
for the words, figures, brackets and letters “Schedule VII (Table: Sl. No. 10)
to (Table: Sl. No. 19)”, the words, figures, brackets and letters “Schedule VII
[Table: Sl. Nos. 17 to 19]” shall be substituted.
Amendment
of section
349.
67. In section 349 of the Income-tax Act, after the word, figures,
brackets and letter “section 263(1)(c)”, the word, figures and brackets “or
263(4)” shall be inserted.
Amendment
of section
351.
68. In section 351 of the Income-tax Act, in sub-section (1),––
(i) in clause (b), the word and figures “or 346” shall be omitted;
(ii) in clause (c), for the word “ensure”, the word “enure” shall be
substituted.
Amendment
of section
352.
69. In section 352 of the Income-tax Act, in sub-section (4), in the Table,
for serial number 8 and the entries relating thereto, the following shall be
substituted, namely:––
73
A
B
C
D
(i)
(ii)
“8.
The
specified
person has merged with
any other—
(a) entity other than a
registered
non-profit
organisation; or
(b) registered non-
profit
organisation
having objects same or
similar to it but the said
merger does not fulfil
such conditions, as may
be prescribed; or
(c) registered non-
profit organisation that
does not have same or
similar objects.
The date
of merger
The date of
merger.”.
Insertion of
new section
354A.
70. After section 354 of the Income-tax Act, the following section shall
be inserted, namely:––
Merger of
registered
non-profit
organisation
in certain
cases.
“354A. Where any registered non-profit organisation merges with any
other registered non-profit organisation, the provisions of section 352
shall not apply if, —
(a) the other registered non-profit organisation has same or similar
objects; and
(b) the said merger fulfils such conditions as may be prescribed.”.
Amendment
of
section
379.
71. In section 379 of the Income-tax Act, in sub-section (2), for the
words “waive any penalty imposable”, the words “waive any penalty imposed
or imposable” shall be substituted.
Amendment
of section
393.
72. In section 393 of the Income-tax Act,––
74
(a) in sub-section (1), in the Table, in serial number (3), in Note 3, for
the words, figures and brackets “serial number 3(iii)”, the words, figures
and brackets, “serial number 3(i)” shall be substituted;
(b) in sub-section (4), in the Table, against serial number 7, in column
C,––
(i) in clause (a), in sub-clause (i), after the words “banking
company”, the words and brackets “or any co-operative society engaged
in carrying on the business of banking (including a co-operative land
mortgage bank)” shall be inserted;
(ii) in clause (b), in the long line, in sub-clause (c), for item (iv), the
following item shall be substituted, namely:—
“(iv) on the compensation amount awarded by a Motor
Accidents Claims Tribunal—
(A) to an individual; or
(B) to a person other than an individual, where the aggregate
interest on such compensation does not exceed ₹ 50000 during the
tax year;”;
(c) sub-section (6) shall be renumbered as sub-section (6) (a) thereof
and after sub-section (6) (a) as so renumbered, the following clause shall
be inserted with effect from the 1st April, 2027, namely:––
“(b) The declaration referred in clause (a) may also be furnished
electronically to a depository, as defined in section (2)(e) of the
Depositories Act, 1996, where––
(i) the income is from units, interest on securities or dividends, as
the case may be, as referred to in section 393(1) [Table: 4(i), 5(i) or
7];
(ii) such units or securities are held with such depository; and
(iii) such securities are listed on a recognised stock exchange,
22 of 1996.
in accordance with such procedure and manner, as may be prescribed.”;
(d) for sub-section (7), the following sub-section shall be substituted,
namely:––
75
“(7) The person responsible for paying any income or sum of the
nature referred to in sub-section (6) shall deliver or cause to be delivered,
such declaration referred therein, received from the person, as specified
in column (B) of the Table in sub-section (6) or the depository, to the
prescribed income-tax authority, on or before the seventh day of the
month immediately following the end of each quarter in which declaration
is furnished to him as per sub-section (6).”.
Amendment
of section
394.
73. In section 394 of the Income-tax Act, in sub-section (1), in the
Table,—
(a) against Sl. No. 1, in column D, for the figure and symbol “1%”, the
figure and symbol “2%” shall be substituted;
(b) against Sl. No. 2, in column D, for the figure and symbol “5%”, the
figure and symbol “2%” shall be substituted;
(c) against Sl. No. 4, in column D, for the figure and symbol “1%”, the
figure and symbol “2%” shall be substituted;
(d) against Sl. No. 5, in column D, for the figure and symbol “1%”, the
figure and symbol “2%” shall be substituted;
(e) against Sl. No. 7, in column D, in clause (a), for the figure and
symbol “5%”, the figure and symbol “2%” shall be substituted;
(f) against Sl. No. 8, in column D, for clauses (a) and (b), the figure and
symbol “2%” shall be substituted.
Amendment
of section
395.
74. In section 395 of the Act,—
(a) in sub-section (1), for clause (c), the following clause shall be
substituted, namely:—
“(c) when a certificate is issued under clause (b) or sub-section (6),
as the case may be, the person responsible for paying the income or sum
shall deduct the tax at the rate specified in such certificate, or deduct no
income-tax, as the case may be, till its validity.”;
(b) after sub-section (5), the following sub-section shall be inserted,
namely:—
“(6) The application referred to in sub-section (1)(a) may also be
filed before the prescribed income-tax authority, subject to such
76
conditions as may be prescribed, and such authority on electronic
verification of the contents of the application, may—
(a) either issue a certificate for deduction of income-tax at lower
rate or no deduction of income-tax; or
(b) reject such application on account of non-fulfillment of the
prescribed conditions or on account of the application being
incomplete.”.
Amendment
of section
397.
75. In section 397 of the Income-tax Act, in sub-section (1), for clause (c),
the following clause shall be substituted with effect from the 1st October,
2026, namely:––
“(c) the provisions of clause (a) shall not apply to––
(i) a person in respect of a transaction where he is required to deduct
tax under section 393(1) [Table: Sl. No. 2(i), 3(i) or 6(ii)]; or
(ii)
a
person
referred
to
in
section
393(4)
[Table: Sl. No. 12.C(a)] in respect of a transaction where he is required
to deduct tax on consideration for transfer of a virtual digital asset under
section 393(1) [Table: Sl.No.8(vi)]; or
(iii) a resident individual or Hindu undivided family in respect of a
transaction where he is required to deduct tax on any consideration for
the transfer of any immovable property under section 393(2) [Table: Sl.
No. 17]; or
(iv) a person notified in this regard by the Central Government.”.
Amendment
of section
399.
76. In section 399 of the Income-tax Act, for the figures “427” at both the
places where they occur, the words, figures and brackets “427(1) and (2)”
shall be substituted.
Amendment
of section
400.
77. In section 400 of the Income-tax Act, for sub-section (2), the
following sub-section shall be substituted, namely:—
“(2) The Board may, with the previous approval of the Central
Government, issue guidelines to remove any difficulty arising in giving
effect to the provisions of this Chapter and such guidelines shall be—
(a) binding on the income-tax authorities and on the person liable
to deduct or, as the case may be, collect income-tax; and
(b) laid before each House of Parliament.”.
77
Amendment
of section
402.
78. In section 402 of the Income-tax Act,––
(a) in clause (27), in sub-clause (c), for the words “authorised person
responsible”, the words, brackets, letter and figures “authorised person,
referred in clause (c) of section 2 of the Foreign Exchange Management
Act, 1999, responsible” shall be substituted;
42 of 1999.
(b) in clause (47), after sub-clause (e), the following sub-clause shall
be inserted, namely: —
“(f) supply of manpower to a person to work under his
supervision, control or direction.”.
Amendment
of
section
411.
79. In section 411 of the Income-tax Act, for sub-section (3), the
following sub-section shall be substituted, namely:––
“(3)(a) if the amount specified in any notice of demand under section
289 is not paid within the period specified under sub-section (1),––
(i) the assessee shall be liable to pay simple interest at 1% for every
month or part of a month comprised in the period; and
(ii) such period shall commence from the day immediately following
the end of the period mentioned in sub-section (1) and end with the day
on which the amount is paid.
(b) No interest shall be charged under this sub-section in respect of any
demand raised on account of penalty levied under section 439,–
(i) up to the date of passing of the order under section 359;
(ii) up to the date of passing of the order under section 363, where the
assessment or reassessment has been made in pursuance to directions
issued by the Dispute Resolution Panel under section 275.”.
Amendment
of section
423.
80. In section 423 of the Income-tax Act, in sub-section (4), in clause (d),
for sub-clause (vii), the following sub-clause shall be substituted, namely:––
“(vii) any tax credit allowed to be set off as per sections 206(2)(e) to
(h) and 206(3) and (4).”.
Amendment
of section
424.
81. In section 424 of the Income-tax Act, in sub-section (2), for clause (f),
the following clause shall be substituted, namely:––
78
“(f) any tax credit allowed to be set off as per sections 206(2)(e) to (h)
and 206(3) and (4).”.
Amendment
of section
425.
82. In section 425 of the Income-tax Act, in sub-section (5), for clause (f),
the following clause shall be substituted, namely:––
“(f) any tax credit allowed to be set off as per sections 206(2)(e) to (h)
and 206(3) and (4).”.
Substitution
of
new
sections for
sections 427
and 428.
83. For sections 427 and 428 of the Income-tax Act, the following sections
shall be substituted, namely:––
Fee
for
default
in
furnishing
statements.
“427. (1) Without prejudice to the provisions of this Act, where any
person fails to deliver or cause to be delivered a statement as per section
397(3)(b) within the time prescribed therein, he shall be liable to pay by
way of fee, a sum of ₹ 200 for every day for which such failure continues.
(2) The amount of fee referred to in sub-section (1) shall–
(a) not exceed the amount of tax deductible or collectible; and
(b) be paid before delivering or causing to be delivered the
statement, as per sub-section (1).
(3) Without prejudice to the provisions of this Act, where any person
who is required to furnish a statement of financial transaction or reportable
account under section 508(1), fails to furnish such statement within the time
prescribed under section 508(2), he shall be liable to pay by way of fee, a
sum of ₹ 200 for every day for which such failure continues and such fee
shall not exceed a sum of ₹ 100000.
Fee
for
default
in
furnishing
return
of
income,
audited
accounts and
reports.
428. Without prejudice to the provisions of this Act, where any person–
(a) required to furnish a return of income under section 263, fails to
do so within the due date, as specified under sub-section (1) of the said
section, he shall be liable to pay by way of fee,––
(i) a sum of ₹ 1000, if the total income of such person does not
exceed ₹ 500000; and
79
(ii) a sum of ₹ 5000, in any other case;
(b) furnishes a return of income under section 263(5) beyond nine
months from the end of relevant tax year, he shall be liable to pay by way
of fee,––
(i) a sum of ₹ 1000, if the total income of such person does not
exceed ₹ 500000; and
(ii) a sum of ₹ 5000, in any other case;
(c) fails to get his accounts audited for any tax year or years and
furnish the report of such audit as required under section 63, he shall be
liable to pay by way of fee,––
(i) a sum of ₹ 75000 for a delay up to one month for which such
failure continues; and
(ii) a sum of ₹ 150000 thereafter;
(d) fails to furnish a report from an accountant as required by section
172, he shall be liable to pay by way of fee,––
(i) a sum of ₹ 50000 for a delay up to one month for which such
failure continues; and
(ii) a sum of ₹ 100000 thereafter.”.
Amendment
of section
439.
84. In section 439 of the Income-tax Act,––
(a) in sub-section (11),––
(i) in clause (e), the word “and” occurring at the end shall be omitted;
(ii) in clause (f), for the word “apply.”, the words “apply; and” shall
be substituted;
(iii) after clause (f), the following clause shall be inserted, namely:––
“(g) income referred to in section 195(1)(b).”.
(b) after sub-section (13), the following sub-section shall be inserted,
namely:––
80
“(13A) Where additional income-tax is paid in accordance with
section 267(5)(ii), the income on which such additional income-tax is paid
shall not form the basis of imposition of penalty under this section.”.
Amendment
of section
440.
85. In section 440 of the Income-tax Act,––
(a) for the marginal heading, the following marginal heading shall be
substituted, namely:––
“Waiver of penalty and immunity from prosecution.”;
(b) for sub-sections (1) to (4), the following sub-sections shall be
substituted, namely:––
“(1) An assessee may make an application to the Assessing Officer to
grant waiver of penalty levied under section 439 and immunity from
initiation of proceedings under section 478 or 479 on fulfilment of the
following conditions: ––
(a) the tax and interest payable as per the order of assessment under
section 270(10) or reassessment under section 279, has been paid within
the period specified in the notice of demand;
(b) where penalty has been levied under the circumstances referred
to in section 439(11)(a) to (f), additional income-tax amounting to
100% of the amount of tax payable on under-reported income has been
paid within the period specified in the notice of demand, in lieu of such
penalty;
(c) where penalty has been levied under the circumstances referred
to in section 439(11)(g), additional income-tax amounting to 120% of
the amount of tax payable on under-reported income has been paid
within the period specified in the notice of demand, in lieu of such
penalty; and
(d) no appeal has been filed against the order of assessment or
reassessment and levy of penalty referred to in clause (a), (b) and (c).
(2) An application referred in sub-section (1) shall be made within one
month from the end of the month in which the order referred to in the said
sub-section is received by the assessee, in such form and verified in such
manner, as may be prescribed.
(3) The Assessing Officer shall, on fulfilment of the conditions as
specified in sub-section (1), and after the expiry of the period of filing
appeal as specified in section 358(3)(a), grant waiver of penalty under
81
section 439 and immunity from initiation of proceedings under section
478 or 479.
(4) No waiver or immunity under sub-section (3) shall be granted if
any proceeding has been initiated under Chapter XXII.”.
Omission of
section 443.
86. Section 443 of the Income-tax Act shall be omitted.
Substitution
of
new
section
for
section 446.
87. For section 446 of the Income-tax Act, the following section shall be
substituted, namely:—
Penalty
for
failure
to
furnish
information
or
for
furnishing
inaccurate
information
on
transaction of
crypto-asset.
“446. (1) If any person who is required to furnish a statement in respect
of a transaction of a crypto-asset under section 509(1), fails to furnish such
statement within the time prescribed under the said section, the prescribed
income-tax authority under that section may impose on him, a penalty of ₹
200 for every day for which such failure continues.
(2) The prescribed income-tax authority may impose a penalty of ₹
50000 on a person referred in sub-section (1), if such person—
(a) provides inaccurate information in the statement and fails to
remove such inaccuracy as per section 509(4); or
(b) fails to comply with due diligence the requirement under section
509(5).”.
Omission of
section 447.
88. Section 447 of the Income-tax Act shall be omitted.
Substitution
of new
section for
section 454.
89. For section 454 of the Income-tax Act, the following section shall be
substituted, namely:––
Penalty
for
failure
to
furnish
statement of
financial
transaction or
reportable
account after
a notice.
“454. Where any person, who is required to furnish a statement of
financial transaction or reportable account under section 508(1), fails to
furnish such statement or reportable account within the period specified
in the notice issued under section 508(7), the income-tax authority
prescribed under section 508(1) may impose on him, a penalty of ₹ 1000
for every day for which such failure continues, beginning from the day
immediately after the period specified in such notice for furnishing such
statement or reportable account expires and such penalty shall not exceed
₹ 100000.”.
82
Amendment
of
section
466.
90. In section 466 of the Income-tax Act, for the figures “1000”, the
figures “25000” shall be substituted.
Amendment
of section
470.
91. In section 470 of the Income-tax Act, the words and figures “or 447”
shall be omitted.
Amendment
of
section
471.
92. In section 471 of the Income-tax Act,––
(a) in sub-section (1), after the words “reasonable opportunity of being
heard”, the words “by way of a show cause notice to that effect” shall be
inserted;
(b) after sub-section (3), the following sub-sections shall be inserted,
namely:––
“(4) Irrespective of anything contained in any other provision of this
Act, where any draft of the proposed order of assessment under section
275 or assessment under section 270 or reassessment under section 279 is
made on or after the 1st April, 2027,––
(a) penalty under section 439, if any, shall constitute part of such
draft assessment or shall be imposed as a part of such order of
assessment or reassessment, as the case may be; and
(b) the reference to the assessment order or the penalty order under
section 439 in any of the provisions of this Act shall take reference to
such order of assessment or reassessment, as the case may be.
(5) Where the approval of the Joint Commissioner is taken for passing
of an order of assessment or reassessment on or after the 1st April, 2027,
such approval shall also be deemed to be the approval for the imposition
of penalty under section 439, if any, constituting part of such order of
assessment or reassessment.”.
Amendment
of section
473.
93. In section 473 of the Income-tax Act,––
(a) for the marginal heading, the following marginal heading shall be
substituted, namely:––
“Contravention of order made during search action.”;
83
(b) for the words “rigorous imprisonment which may extend to two years
and shall also be liable to fine”, the words “simple imprisonment up to two
years and with fine” shall be substituted.
Amendment
of section
474.
94. In section 474 of the Income-tax Act,––
(a) for the marginal heading, the following marginal heading shall be
substituted, namely:––
“Failure to afford facility for inspection of books of account during
search.”;
(b) for the words “rigorous imprisonment for a term which may extend
to two years and shall also be liable to fine”, the words “simple
imprisonment for a term up to six months, or with fine, or with both” shall
be substituted.
Amendment
of section
475.
95. In section 475 of the Income-tax Act, for the words “rigorous
imprisonment for a term which may extend to two years and shall also be
liable to fine”, the words “simple imprisonment for a term up to two years
and with fine” shall be substituted.
Amendment
of section
476.
96. In section 476 of the Income-tax Act, for sub-section (1), the
following sub-section shall be substituted, namely:––
“(1) If a person fails to—
(a) pay the tax deducted at source by him to the credit of the Central
Government, as required by or under the provisions of Chapter XIX-B;
or
(b) pay tax or ensure payment of tax to the credit of the Central
Government in respect of––
(A) any income by way of winnings from online games as
referred in section 393(3) [Table: Sl. No. 2], excluding such
winnings which are wholly in kind, as referred to in Note 2 to the
said Table; or
(B) any sum by way of consideration for transfer of a virtual
digital asset as referred in section 393(1) [Table: Sl. No. 8(vi)],
excluding such consideration which is wholly in kind, as referred to
in Note 6 to the said Table,
he shall be punishable––
84
(i) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of such tax exceeds fifty lakh
rupees; or
(ii) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount of such tax exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
(iii) with fine, in any other case.”.
Amendment
of section
477.
97. In section 477 of the Income-tax Act, for sub-section (1), the
following sub-section shall be substituted, namely:––
“(1) If a person fails to pay the tax collected by him to the credit of
the Central Government, as required under section 397(3)(a), he shall be
punishable––
(a) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of such tax exceeds fifty lakh
rupees; or
(b) with simple imprisonment for a term up to six months or with
fine, or with both, where the amount of such tax exceeds ten lakh
rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.”.
Amendment
of section
478.
98. In section 478 of the Income-tax Act, for sub-sections (1) and (2), the
following sub-sections shall be substituted, namely:––
“(1) If a person wilfully attempts in any manner to evade any tax,
penalty or interest chargeable or imposable, or under-reports his income,
under this Act, he shall be punishable—
(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount sought to be evaded or tax on under-
reported income exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount sought to be evaded or tax on under-
reported income exceeds ten lakh rupees but does not exceed fifty lakh
rupees; or
(c) with fine, in any other case.
(2) If a person wilfully attempts in any manner to evade payment of any
tax, penalty or interest under this Act, he shall be punishable —
85
(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount sought to be evaded exceeds fifty lakh
rupees; or
(b) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount sought to be evaded exceeds ten lakh
rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.”.
Amendment
of section
479.
99. In section 479 of the Income-tax Act, in sub-section (1), for clauses
(a) and (b), the following clauses shall be substituted, namely:––
“(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of tax, which would have been evaded if
the failure had not been discovered, exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount of tax, which would have been evaded if
the failure had not been discovered, exceeds ten lakh rupees but does not
exceed fifty lakh rupees; or
(c) with fine, in any other case.”.
Substitution
of new
sections for
sections 480
and 481.
100. For sections 480 and 481 of the Income-tax Act, the following
sections shall be substituted, namely:––
Failure to
furnish
return of
income
setting forth
undisclosed
income.
“480. If a person wilfully fails to furnish in due time the return of
income, setting forth his undisclosed income for the block period, which is
required to be furnished by notice given under section 294(1)(a), he shall
be punishable—
(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of tax exceeds fifty lakh rupees; or
(b) with simple imprisonment up to six months, or with fine, or with
both, where the amount of tax exceeds ten lakh rupees but does not exceed
fifty lakh rupees; or
(c) with fine, in any other case.
86
Failure to
comply with
a direction
of special
audit or
valuation.
481. If a person wilfully fails to comply with a direction issued to him
under section 268 (5), he shall be punishable with simple imprisonment for
a term up to six months, or with fine, or with both.”.
Amendment
of section
482.
101. In section 482 of the Income-tax Act, for clauses (a) and (b), the
following clauses shall be substituted, namely:––
“(a) with simple imprisonment for a term up to two years, or with fine,
or with both, where the amount of tax, which would have been evaded if
the statement or account had been accepted as true, exceeds fifty lakh
rupees; or
(b) with simple imprisonment for a term up to six months, or with fine,
or with both, where the amount of tax, which would have been evaded if
the statement or account had been accepted as true, exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.”.
Amendment
of section
483.
102. In section 483 of the Income-tax Act, in sub-section (1), for the
words “rigorous imprisonment for a term which shall not be less than three
months but which may extend to two years and with fine”, the words “simple
imprisonment for a term up to two years and with fine” shall be substituted.
Amendment
of section
484.
103. In section 484 of the Income-tax Act, for the longline, the following
longline shall be substituted, namely:––
“he shall be punishable —
(i) with simple imprisonment for a term up to two years, or with
fine, or with both, where the amount of tax, penalty or interest which
would have been evaded, if the declaration, account or statement had
been accepted as true, or which is wilfully attempted to be evaded,
exceeds fifty lakh rupees; or
(ii) with simple imprisonment for a term up to six months, or with
fine, or with both, where the amount of tax, penalty or interest which
would have been evaded, if the declaration, account or statement had
been accepted as true, or which is wilfully attempted to be evaded,
exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(iii) with fine, in any other case.”.
87
Amendment
of section
485.
104. In section 485 of the Income-tax Act, for the words “rigorous
imprisonment for a term which shall not be less than six months but which
may extend to seven years, and with fine”, the words “simple imprisonment
for a term which shall not be less than six months but which may extend to
three years and with fine” shall be substituted.
Amendment
of section
494.
105. In section 494 of the Income-tax Act, in sub-section (1), for the
words “imprisonment which may extend to six months, and shall also be
liable to fine”, the words “simple imprisonment up to one month, or with fine,
or with both” shall be substituted.
Amendment
of
section
522.
106. Section 522 of the Income-tax Act shall be numbered as sub-section
(1) thereof and after sub-section (1) as so numbered, the following sub-
section shall be inserted, namely:––
“(2) No assessment under any of the provisions of this Act shall be
invalid on the ground of any mistake, defect or omission in respect of
quoting of a computer generated Document Identification Number, if the
assessment order is referenced by such number in any manner.”.
Amendment
of
section
536.
107. In section 536 of the Income-tax Act, in sub-section (2),––
(i) in the opening portion, for the word, brackets and figure “sub-section
(3)”, the word, brackets and figure “sub-section (4)” shall be substituted;
(ii) for clause (h), the following clause shall be substituted, namely:—
“(h) where any sum has been allowed as a deduction or has not been
included in the total income of any person, either on account of fulfillment
of certain conditions or for any other reason, for any tax year beginning
before the 1st April, 2026, and such sum was required to be included in
the total income of any subsequent tax year including beginning on or
after the 1st April, 2026 under the repealed Income-tax Act, if it had not
been so repealed, on account of violation of such conditions or for any
other reason, then such sum shall be––
(i) deemed to be the income of such subsequent tax year; and
(ii) included in the total income of the said person under the same
head of income as it would have been included under the repealed
Income-tax Act;”;
88
(iii) in clause (l), for sub-clauses (i) and (ii), the following sub-clauses
shall be substituted, namely:––
“(i) shall be deemed to be the amount eligible for credit under
corresponding provisions or section 206(3) or (4) of this Act, as the case
may be in the case of said assessee; and
(ii) credit for the tax paid under the repealed Income-tax Act shall be
allowed under this Act for the period for which it would have been allowed
under the repealed Income–tax Act if the assessee otherwise continues to
satisfy the conditions as specified in the corresponding provisions or
section 206(3) or (4) of this Act, as the case may be in such tax years;”.
Amendment
of Schedule
III.
108. In Schedule III to the Income-tax Act, in the Table, after serial
number 38 and the entries relating thereto, the following shall be inserted,
namely:—
A
B
C
D
“38A. Disability
Pension
received
(including
service
element
and
disability
element).
An
individual
who has been a
member of the
armed
forces
(including
paramilitary
forces)
of
the
Union.
(a) The individual has
been invalided out of
service in the armed
forces on account of
bodily
disability
attributable
to,
or
aggravated
by
such
service; and
(b) the individual
has
not
retired
on
superannuation
or
otherwise.
89
38B.
Any
interest
on
compensation
amount
awarded
by
Motor
Accident
Claims
Tribunal.
An individual or
his legal heir.
Such interest is received
under
the
Motor
Vehicles Act, 1988 (59
of 1988).
38C.
Any income in
respect of any
award
or
agreement
made
on
account
of
compulsory
acquisition of
any land.
An individual or
a
Hindu
undivided
family.
Such award or agreement
is
made
under
the
provisions of the Right to
Fair Compensation and
Transparency in Land
Acquisition,
Rehabilitation
and
Resettlement Act, 2013
(30 of 2013), except
under section 46 of the
said Act.”.
Amendment
of Schedule
IV.
109. In Schedule IV to the Income-tax Act,––
(a) in the Table, after serial number 13 and the entries relating thereto,
the following shall be inserted, namely:––
A
B
C
D
“13A.
Any
income
arising
on
account
of
providing
capital goods,
equipment or
tooling to a
contract
manufacturer,
being
a
A
foreign
company, who
is
providing
capital goods,
equipment or
tooling to the
contract
manufacturer
for
use
in
electronic
(a) Ownership of such capital
goods, equipment or tooling
remains
with
the foreign
company;
(b)
such
capital
goods,
equipment or tooling is under
the control and direction of the
contract manufacturer;
90
company
resident
in
India.
manufacturing
in India.
(c) the contract manufacturer
is located in a custom bonded
area, that is, a warehouse
referred to in section 65 of the
Customs Act, 1962 (52 of
1962);
(d) the contract manufacturer
produces electronic goods on
behalf of the foreign company
for a consideration;
(e) such exemption shall be
available up to the tax year
2030-2031.
13B.
Any
income
which accrues
or
arises
outside India,
and
is
not
deemed
to
accrue or arise
in India.
An individual,
being a non-
resident for a
period of five
consecutive
tax
years
immediately
preceding the
tax
year
during which
he visits India
for the first
time
for
rendering
services
in
India
in
connection
with
any
scheme
as
may
be
notified by the
Central
Government.
(a) Such individual, during
the relevant tax year renders
any service in India in
connection with any scheme
as may be notified by the
Central Government;
(b) such exemption shall not
be available beyond a period
of five consecutive tax years
commencing from the first
tax year during which he
visits India in connection with
such scheme; and
(c) such other conditions, as
may be prescribed.
13C.
Any
income
accruing
or
arising
in
India
or
deemed
to
accrue or arise
A
foreign
company.
(a) Such foreign company is
notified
by
the
Central
Government in this behalf;
(b) such foreign company
does not own or operate any
91
in India by
way
of
procuring data
centre services
from
a
specified data
centre.
of the physical infrastructure
or any resources of the
specified data centre;
(c) all sales by such foreign
company to users located in
India are made through a
reseller entity being an Indian
company;
(d) such foreign company
maintains and furnishes such
information in such form and
manner,
as
may
be
prescribed; and
(e) such exemption shall be
available up to tax year
ending on the 31st March,
2047.”;
(b) after Note 2 below the Table, the following Note shall be inserted,
namely:––
‘Note 3: For the purposes of Sl.No.13C,––
(a) “data centre” means a dedicated secure space within a
building or centralised location where computing and networking
equipment is concentrated for the purpose of collecting, storing,
processing, distributing or allowing access to large amounts of data;
(b) “data centre services” means the services provided by a data
centre through the use of physical infrastructure including land,
buildings, mechanical electrical power equipments, cooling system,
security and information technology infrastructure including servers,
computers, storage systems, operating systems, security solutions,
network and associated software platforms, networking and other
equipment, human resource in India;
(c) “specified data centre” means a data centre which is––
(i) set up under an approved scheme and is notified in this
behalf by the Central Government in the Ministry of Electronics
and Information Technology; and
92
(ii) owned and operated by an Indian company.’.
Amendment
of Schedule
VI.
110. In Schedule VI to the Income-tax Act, in the Table, in Note 1, in
clause (g),––
(a) for the long line, the following item shall be substituted, namely:––
“(C) of which all the units other than the unit held by a sponsor or
manager are held by non-residents except,––
(I) where such non-resident becomes resident under section 6(2)
or (3) or (4) or (5) or (6) or (7) in any tax year subsequent to that tax
year; and
(II) the number of units held by such resident unit holder or holders
do not exceed 5% of the total units issued and shall fulfil such other
conditions as may be prescribed; or”;
(b) in sub-clause (ii), in item (A), for the figures “2025”, the figures
“2030” shall be substituted.
Amendment
of Schedule
XI.
111. In Schedule XI to the Income-tax Act,––
(a) in Part A,––
(i) in paragraph 4,––
(A) clause (c) shall be omitted;
(B) for clause (f), the following clause shall be substituted,
namely:—
“(f) the fund shall be a fund––
(i) of an establishment to which the provisions of section
1(3) of the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 apply; or
19 of 1952.
(ii) of an establishment notified by the Central Provident
Fund Commissioner under section 1(4) of the said Act,
and such establishment shall obtain exemption under section 17 of
the said Act from the operation of all or any of the provisions of any
scheme as referred to in that section;”;
(ii) in paragraph 5, sub-paragraph (4) shall be omitted;
93
(iii) for paragraph 6, the following paragraph shall be substituted,
namely:—
“6. Employer’s annual contributions, when deemed to be
income received by employee.—The portion of the annual accretion
in the tax year to the balance of an employee in a recognised
provident fund consisting of interest credited on the balance to the
credit of an employee in so far as it is allowed at a rate exceeding
such rate as fixed by the Central Government by notification, shall
be deemed to have been received by the employee and included in
his total income for that tax year and shall be liable to income-tax.”;
(b) in Part C, in paragraph 1,—
(i) clause (d) shall be omitted.
(ii) for clause (e), the following clause shall be substituted, namely:—
“(e) to regulate investment or deposit of the moneys of a
recognised or an approved fund;”.
Amendment
of Schedule
XII.
112. In Schedule XII to the Income-tax Act, in Part A, after serial number
27 and the entries relating thereto, the following shall be inserted, namely:––
“28. Beryllium bearing minerals.
29. Glauconite.
30. Graphite.
31. Indium bearing minerals.
32. Lithium bearing minerals.
33. Niobium bearing minerals.
34. Potash.
35. Rhenium bearing minerals.
36. Tantalum bearing minerals.”.
Amendment
of Schedule
XIV.
113. In Schedule XIV to the Income-tax Act, in paragraph 4,––
(i) in sub-paragraph (1), in clause (a), for the words “this rule”, the
words “this paragraph” shall be substituted;
(ii) after sub-paragraph (2), the following sub-paragraph shall be
inserted, namely:––
“(3) The amount not deductible under sub-clause (i) or (ii) of
section 35(b), which is added under sub-paragraph (1)(a), shall be
94
allowed subsequently as a deduction in a tax year in accordance with
the provisions of the said sub-clause, as the case may be.”.
CHAPTER IV
THE FOREIGN ASSETS OF SMALL TAXPAYERS DISCLOSURE
SCHEME, 2026
Short
title
and
commencem
ent.
114. (1) This Scheme may be called the Foreign Assets of Small
Taxpayers Disclosure Scheme, 2026.
(2) It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint.
Definitions.
115. (1) In this Scheme, unless the context otherwise requires,—
(a) “assessee” means a person,—
(i) being a resident in India within the meaning of section 6 of the
Income-tax Act, 1961 in the previous year; or
43 of 1961.
(ii) being a non-resident or not ordinarily resident in India within
the meaning of clause (6) of section 6 of the said Act in the previous
year, who was resident in India either––
(A) in the previous year to which the income referred to in
section 4 of the Black Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Act, 2015 relates; or
(B) in the previous year in which the undisclosed asset located
outside India was acquired;
22 of 2015.
(b) “assessment” includes reassessment;
(c) “assessment year” shall have the same meaning as assigned to it in
clause (9) of section 2 of the Income-tax Act, 1961;
43 of 1961.
(d) “Board” means the Central Board of Direct Taxes constituted under
section 3 of the Central Boards of Revenue Act, 1963;
54 of 1963.
(e) “declarant” means a person who files declaration under section 116;
(f) “declaration” means the declaration filed under section 116;
95
(g) “last date” means such date as may be notified by the Central
Government in the Official Gazette;
(h) “prescribed” means prescribed by rules made under this Act;
(i) “previous year” shall have the same meaning as assigned to it in
clause (34) of section 2 of the Income-tax Act, 1961;
43 of 1961.
(j) “undisclosed asset located outside India” means an asset (including
financial interest in any entity) located outside India, held by the assessee
in his name or in respect of which he is a beneficial owner, and he has no
explanation about the source of investment in such asset or the explanation
given by him, is in the opinion of the Assessing Officer, unsatisfactory;
(k) “undisclosed foreign income” means the total amount of income of
an assessee from a source located outside India which was chargeable to
tax in India but has not been offered to tax under the Income-tax Act, 1961;
and
43 of 1961.
(l) “value of the asset” means the fair market value of the asset
determined in such manner as may be prescribed.
(2) Words and expressions used herein and not defined but defined in the
Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Act, 2015 or the Income-tax Act, 2025 shall
have the meanings respectively assigned to them in those Acts.
43 of 1961.
22 of 2015.
30 of 2025.
Declaration
by declarant.
116. Subject to the provisions of this Scheme, any person may make, on
or after the date of commencement of this Scheme but on or before the last
date, a declaration, for any previous year, in respect of any income or asset
referred to in section 117, where––
(a) he has failed to furnish a return under section 139 of the Income-tax
Act, 1961; or
43 of 1961.
(b) he has failed to disclose such asset or income, in a return of income
furnished by him under the Income-tax Act, 1961 before the date of
commencement of this Scheme; or
43 of 1961.
(c) such asset or income has escaped assessment within the meaning of
section 147 of the Income-tax Act, 1961.
43 of 1961.
Amount
payable
by
declarant.
117. The declaration referred to in section 116 may be filed in respect of
assets or income as specified in column (2) of the Table below and in respect
of such assets or income, the amount payable by the declarant under this
96
Scheme shall be as specified in column (3), subject to the conditions in
column (4), of the said Table:
TABLE
Sl.
No.
Type of assets or
income
Amount
payable
Conditions
(1)
(2)
(3)
(4)
1.
(a) Undisclosed asset
located outside India;
or
(b)
undisclosed
foreign income.
Aggregate of,–
(i)
tax
at
the
rate
of
thirty per cent.
of the value of
the undisclosed
asset
located
outside India as
on
the
31st
March, 2026;
(ii)
tax at
the
rate
of
thirty per cent.
of
the
undisclosed
foreign
income; and
(iii)
an
amount
equal
to one hundred
per cent. of tax
determined in
clauses (i) and
(ii).
The aggregate value
of
the
undisclosed
asset located outside
India
and
the
undisclosed
foreign
income
does
not
exceed
one
crore
rupees.
2.
(a)
Asset
located
outside India acquired
from income accruing
or
arising
outside
India, by an assessee,
during the period in
which such assessee
was a non-resident,
but such assets were
not declared by him in
the relevant Schedule
in
the
return
of
A fee of one
lakh rupees.
The value of the asset
located outside India
does not exceed five
crore rupees.
97
income on becoming a
resident; or
(b)
asset
located
outside India acquired
from income which
has been offered to tax
under the Income-tax
Act, 1961 (43 of
1961) by the assessee,
but such assets were
not declared by him in
the relevant Schedule
in
the
return
of
income.
Manner
of
making
declaration.
118. (1) A declaration under section 116 shall be made complete in all
respects to the prescribed income-tax authority, in such form and shall be
verified in such manner, as may be prescribed.
(2) The verification referred to in sub-section (1) shall be made
electronically, so as to verify that––
(a) the assessee making the declaration is an eligible assessee; and
(b) the declaration of income or assets is in accordance with the
provisions of this Scheme.
(3) The declaration made under sub-section (1) shall be deemed to be
invalid, if ––
(a) any material particular furnished in the declaration is found to be
false at any stage; or
(b) the declarant violates any of the conditions referred to in this
Scheme.
Procedure
relating
to
manner
of
payment.
119. (1) After electronic verification of the declaration as specified in sub-
section (2) of section 118, the amount payable by the assessee shall be
communicated electronically, within a period of one month from the end of
the month in which the declaration is made, by way of an order in such form
and manner, as may be prescribed.
(2) The assessee shall pay the amount determined under sub-section (1)
within a period of two months from the end of the month in which the order
98
referred to in the said sub-section was received by him and the payment shall
be made in such manner, as may be prescribed.
(3) Where the assessee fails to pay the amount determined under sub-
section (1) or any part thereof within the period specified in sub-section (2),
the assessee may pay such amount within a further period not exceeding two
months, along with simple interest at the rate of one per cent. for every month
or part of a month on such amount.
(4) The assessee shall, upon making the payment under sub-section (2) or
sub-section (3), as the case may be, intimate the details of such payment to
the prescribed income-tax authority, in such form and manner, as may be
prescribed, within the extended period specified in sub-section (3).
(5) Upon receipt of the intimation referred to in sub-section (4), where the
intimation is in accordance with the order under sub-section (1), an order
certifying the payment of the amount as per the declaration, shall be
communicated electronically to the assessee, in such form and manner, as
may be prescribed, within one month from the end of the month of receipt of
such intimation.
(6) Every order made under sub-section (5) shall be conclusive as to the
matters stated therein.
Any income
or
asset
declared not
to
be
included
in
total income.
120. The income or the amount of investment in an asset, which has been
declared in the manner provided in section 118 shall not be included in the
total income of the declarant for any assessment year under the Income-tax
Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015, if the declarant makes the payment of amount
referred to in section 119 within the extended period specified in sub-section
(3) of the said section.
43 of 1961.
22 of 2015.
Any income
or
asset
declared not
to
affect
finality
of
completed
assessments.
121. In respect of income or asset declared or any amount paid thereon,
the declarant shall not be entitled to claim for rectification or revision of any
assessment made under the Income-tax Act, 1961 or the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
or claim any set off or relief in any appeal, reference or other proceeding in
relation to any such assessment.
43 of 1961.
22 of 2015.
Amount paid
in pursuance
of
declaration
non-
refundable.
122. No amount paid under section 119 in pursuance of a declaration
made in the manner provided in section 118 shall be refundable.
Grant
of
immunity
123. Notwithstanding anything contained in the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015,
22 of 2015.
99
from penalty
and
prosecution.
a declarant who makes a valid declaration under this Scheme and pays any
amount, whether as tax, fee or otherwise, as the case may be, in accordance
with the provisions of this Scheme, shall be granted immunity from the levy
of any further tax or penalty and also from prosecution under the said Act in
respect of income or asset so declared, for the previous year ending on the
31st March, 2026 or any earlier previous year.
Non-
application
of Scheme.
124. The provisions of this Scheme shall not apply in respect of—
(a) any income or asset which represents, directly or indirectly,
proceeds of crime in respect of which proceedings have been initiated, or
pending under the Prevention of Money-laundering Act, 2002; or
(b) any income or asset relating to an assessment year for which
assessment proceedings have been completed under the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act,
2015.
15 of 2003.
22 of 2015.
Effect
of
declaration
on
pending
assessment
proceedings.
125. Where a declaration of any income or asset is made under this
Scheme and assessment proceedings under the Income-tax Act, 1961 or the
Black Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015 are pending in respect of such income or assets, the Assessing
Officer shall take such declaration into account while finalising such
assessment order.
43 of 1961.
22 of 2015.
Power
of
Board
to
issue
directions,
etc.
126. (1) The Board may, from time to time, issue such directions or orders
to the prescribed income-tax authorities, as it may deem fit:
Provided that no direction or order shall be issued so as to require that a
particular case be disposed of in a particular manner.
(2) Without prejudice to the generality of the foregoing power, the Board
may, if it considers necessary or expedient so to do, for the purposes of this
Scheme, including collection of revenue, issue from time to time, general or
special orders in respect of any class of cases, setting forth directions or
instructions as to the guidelines, principles or procedures to be followed by
the prescribed income-tax authorities in any work relating to this Act,
including collection of revenue and issue such order, by way of relaxation of
any provision of this Chapter or otherwise, if the Board is of the opinion that
it is necessary in the public interest so to do.
Power
to
make rules.
127. (1) The Central Government may, by notification in the Official
Gazette, make rules for carrying out the provisions of this Scheme.
100
(2) Without prejudice to the generality of the foregoing power, such rules
may provide for all or any of the following matters, namely:—
(a) the form in which a declaration may be made and the manner of its
verification under sub-section (1) of section 118;
(b) the form and manner in which order shall be passed under sub-
section (1) of section 119;
(c) the manner of making payment under sub-section (2) of section
119;
(d) the form and manner of intimation of payment under sub-section
(4) of section 119;
(e) the form and manner in which the order certifying the payment shall
be communicated under sub-section (5) of section 119;
(f) the manner of calculating the value of the asset under this Scheme;
(g) the manner of calculating the amount payable under this Scheme;
(h) any other matter which is to be, or may be, prescribed, or in respect
of which provision is to be made, by rules for carrying out the provisions
of this Scheme.
(3) Every rule made by the Central Government under this Scheme shall
be laid, as soon as may be after it is made, before each House of Parliament,
while it is in session, for a total period of thirty days, which may be comprised
in one session or in two or more successive sessions, and if, before the expiry
of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the rule or both
Houses agree that the rule should not be made, the rule shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be without prejudice
to the validity of anything previously done under that rule.
Power
to
remove
difficulties.
128. (1) If any difficulty arises in giving effect to the provisions of this
Scheme, the Central Government may, by order, not inconsistent with the
provisions of this Scheme, remove the difficulty.
(2) No order under sub-section (1) shall be made after the expiry of period
of two years from the date on which provisions of this Scheme come into
force.
101
(3) Every order made under sub-section (1) shall, as soon as may be after
it is made, be laid before each House of Parliament.
CHAPTER V
INDIRECT TAXES
Customs
Amendment
of section 1.
129. In the Customs Act, 1962 (hereinafter referred to as the Customs
Act), in section 1, in sub-section (2), after the words “whole of India”, the
words “, fishing and fishing related activities by Indian-flagged fishing
vessels beyond territorial waters of India” shall be inserted.
52 of 1962.
Amendment
of section 2.
130. In section 2 of the Customs Act, clause (28A) shall be renumbered
as clause (28B) thereof and before clause (28B) as so renumbered, the
following clause shall be inserted, namely:––
‘(28A) “Indian-flagged fishing vessel” means a vessel which is used
or intended to be used for the purpose of fishing in the seas and entitled to
fly the flag of India;’.
Amendment
of section 28.
131. In section 28 of the Customs Act, in sub-section (6), in clause (i),
for the words “be deemed to be conclusive as to the matters stated therein”,
the words, brackets and figure “, be deemed to be conclusive as to the matters
stated therein and penalty so paid under sub-section (5), on determination
under this sub-section, shall also be deemed to be a charge for non-payment
of duty” shall be substituted.
Amendment
of
section
28J.
132. In the Customs Act, in section 28J, in sub-section (2),—
(a) for the words “three years”, the words “five years” shall be
substituted;
(b) for the proviso, the following proviso shall be substituted,
namely:––
“Provided that in respect of any advance ruling in force on the date
on which the Finance Bill, 2026 receives the assent of the President, the
Authority shall, upon a request by the applicant, extend the validity for
five years from the date of the ruling.”.
102
Insertion of
new section
56A.
133. After section 56 of the Customs Act, the following section shall be
inserted, namely:––
Special
provision for
fishing and
fishing
related
activities.
“56A. (1) Notwithstanding anything contained in this Act or in any
other law for the time being in force, fish harvested by an Indian-flagged
fishing vessel beyond territorial waters of India,––
(a) may be brought into India free of duty;
(b) that has landed at foreign port may be treated as export of goods,
in such manner and subject to such conditions as may be provided by
rules.
(2) The Board may make regulations providing for the form and
manner of making an entry in respect of fish harvested including its
declaration, custody, examination, assessment of duty, clearance, transit
or transhipment.”.
Substitution
of new
section for
section 67.
134. In the Customs Act, for section 67, the following section shall be substituted,
namely:––
Removal of
goods from
one
warehouse
to another.
“67. The owner of any warehoused goods may remove them from
one warehouse to another, subject to such conditions as may be
prescribed.”.
Amendment
of section
84.
135. In section 84 of the Customs Act, in clause (b), for the words “the
examination”, the words “the custody, examination” shall be substituted.
Customs Tariff
Amendment
of First
Schedule.
136. In the Customs Tariff Act, 1975, the First Schedule shall––
51 of 1975.
(a) be amended in the manner specified in the Second Schedule;
(b) with effect from the 1st day of April, 2026, be also amended in
the manner specified in the Third Schedule; and
(c) with effect from the 1st day of May, 2026, be also amended in
the manner specified in,–
103
(i) the Fourth Schedule; and
(ii) the Fifth Schedule.
Central Goods and Services Tax
Amendment
of section
15.
137. In the Central Goods and Services Tax Act, 2017, (hereinafter
referred to as the Central Goods and Services Tax Act), in section 15, in sub-
section (3), for clause (b), the following clause shall be substituted, namely:–
–
“(b) after the supply has been effected, if for such discount, a credit
note has been issued by the supplier and input tax credit as is attributable
to such discount has been reversed by the recipient of the supply, in
accordance with the provisions of section 34.”.
Amendment
of section
34.
138. In section 34 of the Central Goods and Services Tax Act, in sub-
section (1), after the words “both supplied are found to be deficient”, the
words, brackets, letter and figures “or where a discount referred to in clause
(b) of sub-section (3) of section 15 is given” shall be inserted.
Amendment
of section
54.
139. In section 54 of the Central Goods and Services Tax Act,––
(a) in sub-section (6), after the words “supply of goods or services or
both”, the words, brackets and figures “or of unutilised input tax credit
allowed under clause (ii) of the first proviso to sub-section (3)” shall be
inserted;
(b) in sub-section (14), after the words, brackets and figures “sub-
section (5) or sub-section (6)”, the words “, other than cases where refund
of tax is claimed on account of goods exported out of India
with payment of tax,” shall be inserted.
Amendment
of section
101A.
140. In section 101A of the Central Goods and Services Tax Act, after
sub-section (1), the following sub-section shall be inserted, namely:––
“(1A) Notwithstanding anything contained in sub-section (1), till the
National Appellate Authority is constituted under that sub-section, the
Government, may on the recommendations of the Council, by
notification, empower any existing Authority constituted under any law
for the time being in force to hear appeals made under section 101B and
in such case,––
(a) the provisions of sub-sections (2) to (13) shall not apply; and
104
(b) any reference to the National Appellate Authority under this
Chapter shall be construed as a reference to such Authority.
Explanation.–– For the purposes of this sub-section, the expression
“existing Authority” shall include a Tribunal.”.
Integrated Goods and Services Tax
Amendment
of section
13.
141. In section 13 of the Integrated Goods and Services Tax Act, 2017,
in sub-section (8), clause (b) shall be omitted.
13 of 2017.
CHAPTER VI
MISCELLANEOUS
PART I
AMENDMENT TO THE FINANCE ACT, 2001
Amendment
of Seventh
Schedule to
Act 14 of
2001.
142. In the Finance Act, 2001, the Seventh Schedule shall be amended
in the manner specified in the Sixth Schedule, with effect from the 1st day of
May, 2026.
PART II
AMENDMENTS TO THE FINANCE (NO.2) ACT, 2004
Amendment
of Act 23 of
2004.
143. In the Finance (No.2) Act, 2004, in section 98, in the Table, against
serial number 4,––
(i) against entry (a) relating to sale of an option in securities, in column
(3), for the figures and word “0.1 per cent.”, the figures and word “0.15 per
cent.” shall be substituted;
(ii) against entry (b) relating to sale of an option in securities, where
option is exercised, in column (3), for the figures and word “0.125 per
cent.”, the figures and word “0.15 per cent.” shall be substituted;
(iii) against entry (c) relating to sale of a futures in securities, in column
(3), for the figures and word “0.02 per cent.”, the figures and word “0.05
per cent.” shall be substituted.
PART III
AMENDMENTS TO THE BLACK MONEY (UNDISCLOSED FOREIGN
INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015
105
Amendment
of Act 22 of
2015.
144. In the Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015,––
(a) in section 49, after the proviso, the following proviso shall be
inserted and shall be deemed to have been inserted with effect from the
1st day of October, 2024, namely:––
“Provided further that this section shall not apply in respect of an asset
or assets (other than immovable property), where the aggregate value of
such asset or assets does not exceed twenty lakh rupees.”;
(b) in section 50, the following proviso shall be inserted and shall be
deemed to have been inserted with effect from the 1st day of October,
2024, namely:––
“Provided that this section shall not apply in respect of an asset or
assets (other than immovable property), where the aggregate value of
such asset or assets does not exceed twenty lakh rupees.”.
_______________________________
Declaration under the Provisional Collection of Taxes Act, 2023
It is hereby declared that it is expedient in the public interest that the
provisions of sub-clause (a) of clause 136 of this Bill shall have immediate
effect under the Provisional Collection of Taxes Act, 2023.
50 of 2023.
____________________________________
106
THE FIRST SCHEDULE
(See sections 2 and 3)
PART I
A.–– INCOME-TAX UNDER THE INCOME-TAX ACT, 1961
Paragraph A
(I) In the case of every individual other than the individual referred to in
items (II) and (III) of this Paragraph or Hindu undivided family or association
of persons or body of individuals, whether incorporated or not, or every artificial
juridical person referred to in section 2(31)(vii) of the Income-tax Act, 1961
(hereafter in this Part I-A referred to as the said Act), not being a case to which
Paragraphs B, C, D and E of this Part applies,—
Rates of income-tax
43 of 1961.
(1) where the total income does
not exceed Rs. 2,50,000
Nil;
(2) where the total income
exceeds Rs. 2,50,000 but does not
exceed Rs. 5,00,000
5 per cent. of the amount by which
the total income exceeds Rs.
2,50,000;
(3) where the total income
exceeds Rs. 5,00,000 but does not
exceed Rs. 10,00,000
Rs. 12,500 plus 20 per cent. of the
amount by which the total income
exceeds ₹ 5,00,000;
(4) where the total income
exceeds Rs.10,00,000
Rs. 1,12,500 plus 30 per cent. of the
amount by which the total income
exceeds Rs. 10,00,000.
(II) In the case of every individual, being a resident in India, who is of the
age of sixty years or more but less than eighty years at any time during the
previous year,—
Rates of income-tax
(1) where the total income does
not exceed Rs. 3,00,000
Nil;
(2) where the total income
exceeds Rs. 3,00,000 but does
not exceed Rs. 5,00,000
5 per cent.of the amount by which the
total income exceeds Rs. 3,00,000;
(3) where the total income
exceeds Rs. 5,00,000 but does
not exceed Rs. 10,00,000
Rs. 10,000 plus 20 per cent.of the
amount by which the total income
exceeds Rs. 5,00,000;
(4) where the total income
exceeds Rs. 10,00,000
Rs. 1,10,000 plus 30 per cent.of the
amount by which the total income
exceeds Rs. 10,00,000.
107
(III) In the case of every individual, being a resident in India, who is of the
age of eighty years or more at any time during the previous year,—
Rates of income-tax
(1) where the total income does
not exceed Rs. 5,00,000
Nil;
(2) where the total income
exceeds Rs. 5,00,000 but does
not exceed Rs. 10,00,000
20 per cent.of the amount by which
the total income exceeds Rs. 5,00,000;
(3) where the total income
exceeds Rs. 10,00,000
Rs. 1,00,000 plus 30 per cent.of the
amount by which the total income
exceeds Rs. 10,00,000.
Paragraph B
In the case of every co-operative society,—
Rates of income-tax
(1) where the total income does not
exceed Rs. 10,000
10 per cent.of the total income;
(2) where the total income exceeds
Rs. 10,000 but does not exceed Rs.
20,000
Rs. 1,000 plus 20 per cent.of the
amount by which the total
income exceeds Rs. 10,000;
(3) where the total income exceeds
Rs. 20,000
Rs. 3,000 plus 30 per cent.of the
amount by which the total
income exceeds Rs. 20,000.
Paragraph C
In the case of every firm,—
Rate of income-tax
On the whole of the total income
30 per cent.
Paragraph D
In the case of every local authority,—
Rate of income-tax
On the whole of the total income
30 per cent..
Paragraph E
In the case of a company,—
Rates of income-tax
108
I. In the case of a domestic
company,—
(i) where its total turnover or the
gross receipt in the previous year 2023-
24 does not exceed Rs. 400 crores;
25 per cent. of the total
income;
(ii) other than that referred to in
item (i)
30 per cent. of the total
income.
II. In the case of a company other
than a domestic company,—
(i) on so much of the total income
as consists of,—
(a) royalties received from
Government or an Indian concern in
pursuance of an agreement made by it
with the Government or the Indian
concern after the 31st March, 1961
but before the 1st April, 1976; or
(b) fees for rendering technical
services received from Government
or an Indian concern in pursuance of
an agreement made by it with the
Government or the Indian concern
after the 29th February, 1964 but
before the 1st April, 1976,
and where such agreement has, in
either case, been approved by the
Central Government;
50 per cent.;
(ii) on the balance, if any, of the
total income
35 per cent..
Paragraph F
Surcharge on income-tax
The amount of income-tax computed in accordance with Paragraphs A
to E, or the provisions of section 111A or section 112 or section 112A of the
said Act, in the case of person as specified in column B in Table 1 below, shall
be increased by a surcharge, for the purposes of the Union, calculated at the rate
or rates as specified in column C of the said Table, of such income-tax.
TABLE 1
Sl.
No.
Person
Rate of surcharge
109
A
B
C
1.
(i) Every individual; or
(ii)
Hindu
undivided
family; or
(iii)
association
of
persons, except in a case
of
an
association
of
persons consisting of only
companies as its members,
whether incorporated or
not; or
(iv) body of individuals,
whether incorporated or
not; or
(v)
every
artificial
juridical person referred to
in section 2(31)(vii) of the
said Act.
(i) Where the total income (including
dividend income or capital gains
under the provisions of sections
111A, 112 and 112A of the said Act)
exceeds Rs. 50,00,000 but does not
exceed Rs. 1,00,00,000, at the rate of
10 per cent.;
(ii) where the total income (including
dividend income or capital gains
under the provisions of sections
111A, 112 and 112A of the said Act)
exceeds Rs. 1,00,00,000 but does not
exceed Rs. 2,00,00,000, at the rate of
15 per cent.;
(iii)
where
the
total
income
(excluding dividend income or capital
gains under the provisions of sections
111A, 112 and 112A of the said Act)
exceeds Rs. 2,00,00,000 but does not
exceed Rs. 5,00,00,000, at the rate of
25 per cent.;
(iv)
where
the
total
income
(excluding dividend income or capital
gains under the provisions of sections
111A, 112 and 112A of the said Act)
exceeds Rs. 5,00,00,000, at the rate of
37 per cent.;
(v) where the total income (including
dividend income or capital gains
under the provisions of sections
111A, 112 and 112A of the said Act)
exceeds Rs. 2,00,00,000, but is not
covered in clauses (iii) and (iv), at the
rate of 15 per cent.;
(vi) where the total income includes
any dividend income or capital gains
under the provisions of sections
111A, 112 and 112A of the said Act,
the rate of surcharge on the amount of
income-tax computed in respect of
that part of income shall not exceed
15 per cent.and the provisions of
clause (i) or (ii), as the case may be,
shall apply accordingly.
110
2.
Association of persons
consisting
of
only
companies as its members.
(i) Where the total income exceeds
Rs. 50,00,000 but does not exceed Rs.
1,00,00,000, at the rate of 10 per cent.
(ii) where the total income exceeds
Rs. 1,00,00,000, at the rate of 15 per
cent.
3.
Every
co-operative
society.
(i) Where the total income exceeds Rs.
1,00,00,000 but does not exceed Rs.
10,00,00,000, at the rate of 7 per cent.
(ii) where the total income exceeds
Rs. 10,00,00,000, at the rate of 12 per
cent.
4.
Every
firm
or
local
authority.
Where the total income exceeds Rs.
1,00,00,000, at the rate of 12 per cent.
5.
Every domestic company.
(i) Where the total income exceeds Rs.
1,00,00,000 but does not exceed Rs.
10,00,00,000, at the rate of 7 per cent.
(ii) where the total income exceeds
Rs. 10,00,00,000, at the rate of 12 per
cent.
6.
Every
company,
other
than a domestic company.
(i) Where the total income exceeds Rs.
1,00,00,000 but does not exceed Rs.
10,00,00,000, at the rate of 2 per cent.
(ii) where the total income exceeds
Rs. 10,00,00,000, at the rate of 5 per
cent.
Further, in respect of the persons mentioned in column B of the Table 2
below, having total income exceeding the amount as specified in column C of
the said Table but does not exceed the amount specified in column D thereof,
the total amount payable as income-tax and surcharge thereon shall not exceed
the amount determined as per the following formula:—
Wo = Uo + Vo
where,––
Wo = the total amount beyond which the total amount payable as income-
tax and surcharge thereon shall not exceed;
Uo = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table 2 below; and
Vo = the total income – amount as specified in column C of the said Table.
111
TABLE 2
Sl.
No.
Person
Amount
Amount
A
B
C
D
1.
Table 1: Sl. No.
1.B.
Rs. 50,00,000.
Rs. 1,00,00,000.
Rs. 1,00,00,000.
Rs. 2,00,00,000.
Rs. 2,00,00,000.
Rs. 5,00,00,000.
Rs. 5,00,00,000.
-
2.
Table 1: Sl. No.
2.B.
Rs. 50,00,000.
Rs. 1,00,00,000.
Rs. 1,00,00,000.
-
3.
Table 1: Sl. No.
3.B.
Rs. 1,00,00,000.
Rs. 10,00,00,000.
Rs. 10,00,00,000.
-
4.
Table 1: Sl. No.
4.B.
Rs. 1,00,00,000.
-
5.
Table 1: Sl. No.
5.B and 6.B.
Rs. 1,00,00,000.
Rs. 10,00,00,000.
Rs. 10,00,00,000.
-
B.–– INCOME-TAX UNDER THE INCOME-TAX ACT, 2025
Paragraph A
(I) In the case of every individual other than the individual referred to
in items (II) and (III) of this Paragraph or Hindu undivided family or association
of persons or body of individuals, whether incorporated or not, or every artificial
juridical person referred to in section 2(77)(g) of the Income-tax Act, 2025
(hereafter in this Part I-B referred to as the said Act), not being a case to which
Paragraphs B, C, D and E of this Part applies,—
Rates of income-tax
30 of 2025.
(1) where the total income
does not exceed ₹ 250000
Nil;
(2) where the total income
exceeds ₹ 250000 but does not
exceed ₹ 500000
5% of the amount by which the
total income exceeds ₹ 250000;
(3) where the total income
exceeds ₹ 500000 but does not
exceed ₹ 1000000
₹ 12500 plus 20% of the amount
by which the total income exceeds
₹ 500000;
112
(4) where the total income
exceeds ₹ 1000000
₹ 112500 plus 30% of the amount
by which the total income exceeds
₹ 1000000.
(II) In the case of every individual, being a resident in India, who is of
the age of sixty years or more but less than eighty years at any time during the
tax year,—
Rates of income-tax
(1) where the total income does
not exceed ₹ 300000
Nil;
(2) where the total income
exceeds ₹ 300000 but does not
exceed ₹ 500000
5% of the amount by which the
total income exceeds ₹ 300000;
(3) where the total income
exceeds ₹ 500000 but does not
exceed ₹ 1000000
₹ 10000 plus 20% of the amount
by which the total income exceeds
₹ 500000;
(4) where the total income
exceeds ₹ 1000000
₹ 110000 plus 30% of the amount
by which the total income exceeds
₹ 1000000.
(III) In the case of every individual, being a resident in India, who is of
the age of eighty years or more at any time during the tax year,—
Rates of income-tax
(1) where the total income does
not exceed ₹ 500000
Nil;
(2) where the total income
exceeds ₹ 500000 but does not
exceed ₹ 1000000
20% of the amount by which the
total income exceeds ₹ 500000;
(3) where the total income
exceeds ₹ 1000000
₹ 100000 plus 30% of the amount by
which the total income exceeds ₹
1000000.
Paragraph B
In the case of every co-operative society,—
Rates of income-tax
(1) where the total income does not
exceed ₹ 10000
10% of the total income;
(2) where the total income exceeds
₹ 10000 but does not exceed ₹
20000
₹ 1000 plus 20% of the amount by
which the total income exceeds ₹
10000;
(3) where the total income exceeds
₹ 20000
₹ 3000 plus 30% of the amount by
which the total income exceeds ₹
20000.
Paragraph C
113
In the case of every firm,—
Rate of income-tax
On the whole of the total income
30%.
Paragraph D
In the case of every local authority,—
Rate of income-tax
On the whole of the total income
30%.
Paragraph E
In the case of a company,—
Rates of income-tax
I. In the case of a domestic
company,—
(i) where its total turnover or
the gross receipt in the tax year
2024-25 does not exceed ₹ 400
crores;
25% of the total income;
(ii) other than that referred to
in item (i)
30% of the total income.
II. In the case of a company
other than a domestic company,—
(i) on so much of the total
income as consists of,—
(a) royalties received
from Government or an
Indian concern in pursuance
of an agreement made by it
with the Government or the
Indian concern after the 31st
March, 1961 but before the
1st April, 1976; or
(b) fees for rendering
technical services received
from Government or an
Indian concern in pursuance
of an agreement made by it
with the Government or the
Indian concern after the 29th
50%;
114
February, 1964 but before the
1st April, 1976,
and where such agreement has, in
either case, been approved by the
Central Government;
(ii) on the balance, if any, of
the total income.
35%.
Paragraph F
Surcharge on income-tax
The amount of income-tax computed in accordance with Paragraphs A
to E, or the provisions of section 196, 197 or 198 of the said Act, in the case of
person as specified in column B in Table 1 below, shall be increased by a
surcharge, for the purposes of the Union, calculated at the rate or rates as
specified in column C of the said Table, of such income-tax.
TABLE 1
Sl.
No.
Person
Rate of surcharge
A
B
C
1.
(i) Every individual;
(ii)
Hindu
undivided
family; or
(iii)
association
of
persons, except in a case
of
an
association
of
persons consisting of only
companies as its members,
whether incorporated or
not; or
(iv) body of individuals,
whether incorporated or
not; or
(v)
every
artificial
juridical person referred to
in section 2(77)(g) of the
said Act.
(i) Where the total income (including
dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act) exceeds
₹ 5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the total income (including
dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act) exceeds
₹ 10000000 but does not exceed ₹
20000000, at the rate of 15%;
(iii) where the total income (excluding
dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act) exceeds
₹ 20000000 but does not exceed ₹
50000000, at the rate of 25%;
(iv) where the total income (excluding
dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act) exceeds
₹ 50000000, at the rate of 37%;
115
(v) where the total income (including
dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act) exceeds
₹ 20000000, but is not covered in (iii)
and (iv) above, at the rate of 15%;
(vi) where the total income includes
any dividend income or capital gains
under the provisions of sections 196,
197 and 198 of the said Act, the rate of
surcharge on the amount of income-
tax computed in respect of that part of
income shall not exceed 15% and the
provisions of clause (i) or (ii), as the
case may be, shall apply accordingly.
2.
Association of persons
consisting
of
only
companies as its members.
(i) Where the total income exceeds ₹
5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the total income exceeds ₹
10000000, at the rate of 15%.
3.
Every
co-operative
society.
(i) Where the total income exceeds ₹
10000000 but does not exceed ₹
100000000, at the rate of 7%;
(ii) where the total income exceeds ₹
100000000, at the rate of 12%.
4.
Every
firm
or
local
authority.
Where the total income exceeds ₹
10000000, at the rate of 12%.
5.
Every domestic company.
(i) Where the total income exceeds ₹
10000000 but does not exceed ₹
100000000, at the rate of 7%;
(ii) where the total income exceeds ₹
100000000, at the rate of 12%.
6.
Every
company,
other
than a domestic company.
(i) Where the total income exceeds ₹
10000000 but does not exceed ₹
100000000, at the rate of 2%;
(ii) where the total income exceeds ₹
100000000, at the rate of 5%.
116
Further, in respect of the persons mentioned in column B of the Table 2
below, having total income exceeding the amount as specified in column C of
the said Table but does not exceed the amount specified in column D thereof,
the total amount payable as income-tax and surcharge thereon shall not exceed
the amount determined as per the following formula:—
Wn = Un + Vn
where,––
Wn = the total amount beyond which the total amount payable as income-
tax and surcharge thereon shall not exceed;
Un = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table 2 below; and
Vn = the total income – amount as specified in column C of the said Table.
TABLE 2
Sl.
No.
Person
Amount
Amount
A
B
C
D
1.
Table 1: Sl. No.
1.B.
₹ 50,00,000.
₹ 1,00,00,000.
₹1,00,00,000.
₹ 2,00,00,000.
₹ 2,00,00,000.
₹ 5,00,00,000.
₹ 5,00,00,000.
-
2.
Table 1: Sl. No.
2.B.
₹ 50,00,000.
₹ 1,00,00,000.
₹1,00,00,000.
-
3.
Table 1: Sl. No.
3.B.
₹ 1,00,00,000.
₹ 10,00,00,000.
₹ 10,00,00,000.
-
4.
Table 1: Sl. No.
4.B.
₹ 1,00,00,000.
-
5.
Table 1: Sl. No.
5.B and 6.B.
₹1,00,00,000.
₹10,00,00,000.
₹ 10,00,00,000.
-
117
PART II
RATES FOR DEDUCTION OF TAX AT SOURCE IN CERTAIN
CASES
In every case in which under the provisions of sections 393(1)[Table: Sl.
Nos. 1(i) and 5], 393(2)[Table: Sl. Nos. 7, 8, 9 and 17] and 393(3)[Table: Sl.
Nos. 1, 2 and 3] of the Income-tax Act, 2025 (hereafter in this Part referred to
as the said Act), tax is to be deducted at the rates in force, deduction shall be
made from the income subject to the deduction at the following rates:—
30 of 2025.
Rate of
income-tax
1.
In the case of a person other than a company—
(a) where the person is resident in India,—
(i) on income by way of interest other than
“Interest on securities”
10%;
(ii) on income by way of winnings from
lotteries, puzzles, card games and other
games of any sort (other than winnings
from online games)
30%;
(iii) on income by way of winnings from
horse races
30%;
(iv) on income by way of net winnings
from online games
30%;
(v) on income by way of insurance
commission
2%;
(vi) on income by way of interest payable
on—
(A) any debentures or securities for
money issued by or on behalf of
any local authority or a corporation
established by a Central, State or
Provincial Act;
(B) any debentures issued by a
company where such debentures
are listed on a recognised stock
exchange in India in accordance
with the
Securities
Contracts
(Regulation) Act, 1956 (42 of
10%;
118
1956)
and
the
rules
made
thereunder;
(C) any security of the Central
Government or State Government;
(vii)
on any other income
10%;
(b) where the person is not resident in India,—
(i) in the case of a non-resident Indian,—
(A) on any investment income
20%;
(B) on income by way of long-term
capital gains referred to in section
214 or 197(4) of the said Act
12.5%;
(C) on income by way of long-term
capital gains referred to in section
198 of the said Act exceeding ₹
125000
12.5%;
(D) on other income by way of
long-term capital gains [not being
long-term capital gains referred to
in Schedule II[Table: Sl. Nos. 14
and 17] [to the extent it relates to
section 10(36) of the Income-tax
Act, 1961 (43 of 1961)] of the said
Act]
12.5%;
(E) on income by way of short-term
capital gains referred to in section
196 of the said Act
20%;
(F) on income by way of interest
payable by Government or an
Indian
concern
on
moneys
borrowed or debt incurred by
Government or the Indian concern
in foreign currency (not being
income by way of interest referred
to in section 393(2)[Table: Sl. Nos.
2 to 5] of the said Act)
20%;
(G) on income by way of royalty
payable by Government or an
Indian concern in pursuance of an
agreement made by it with the
Government or the Indian concern
20%;
119
where
such
royalty
is
in
consideration for the transfer of all
or any rights (including the
granting of a licence) in respect of
copyright in any book referred to in
section 207(3)(a) of the said Act, to
the Indian concern, or in respect of
any computer software referred to
in section 207(3)(b) of the said Act,
to a person resident in India
(H) on income by way of royalty
[not being royalty of the nature
referred to in sub-item (b)(i)(G)]
payable by Government or an
Indian concern in pursuance of an
agreement made by it with the
Government or the Indian concern
and where such agreement is with
an Indian concern, the agreement is
approved
by
the
Central
Government or where it relates to a
matter included in the industrial
policy of the Government of India,
the agreement is in accordance with
that policy
20%;
(I) on income by way of fees for
technical services payable by
Government or an Indian concern
in pursuance of an agreement made
by it with the Government or the
Indian concern and where such
agreement is with an Indian
concern, the agreement is approved
by the Central Government or
where it relates to a matter included
in the industrial policy of the
Government
of
India,
the
agreement is in accordance with
that policy
20%;
(J) on income by way of winnings
from lotteries, crossword puzzles,
card games and other games of any
sort (other than winnings from
online games)
30%;
(K) on income by way of winnings
from horse races
30%;
120
(L) on income by way of net
winnings from online games
30%;
(M) on income by way of dividend,
referred to in section 207(1)[Table:
Sl. No. 2] of the said Act
10%;
(N) on income by way of dividend
other than the income referred to in
sub-item (b)(i)(M)
20%;
(O) on the whole of the other
income
30%;
(ii) in the case of any other person,—
(A) on income by way of interest
payable by Government or an
Indian
concern
on
moneys
borrowed or debt incurred by
Government or the Indian concern
in foreign currency (not being
income by way of interest referred
to in section 393(2)[Table: Sl. Nos.
2 to 5] of the said Act)
20%;
(B) on income by way of royalty
payable by Government or an
Indian concern in pursuance of an
agreement made by it with the
Government or the Indian concern
where
such
royalty
is
in
consideration for the transfer of all
or any rights (including the
granting of a licence) in respect of
copyright in any book referred to in
section 207(3)(a) of the said Act, to
the Indian concern, in respect of
any computer software referred to
in section 207(3)(b) of the said Act,
to a person resident in India
20%;
(C) on income by way of royalty
[not being royalty of the nature
referred to in sub-item (b)(ii)(B)]
payable by Government or an
Indian concern in pursuance of an
agreement made by it with the
Government or the Indian concern
and where such agreement is with
an Indian concern, the agreement is
20%;
121
approved
by
the
Central
Government or where it relates to a
matter included in the industrial
policy of the Government of India,
the agreement is in accordance with
that policy
(D) on income by way of fees for
technical services payable by
Government or an Indian concern
in pursuance of an agreement made
by it with the Government or the
Indian concern and where such
agreement is with an Indian
concern, the agreement is approved
by the Central Government or
where it relates to a matter included
in the industrial policy of the
Government
of
India,
the
agreement is in accordance with
that policy
20%;
(E) on income by way of winnings
from lotteries, crossword puzzles,
card games and other games of any
sort (other than winnings from
online games)
30%;
(F) on income by way of winnings
from horse races
30%;
(G) on income by way of net
winnings from online games
30%;
(H) on income by way of short-
term capital gains referred to in
section 196 of the said Act
20%;
(I) on income by way of long-term
capital gains referred to in section
197(4) of the said Act
12.5%;
(J) on income by way of long-term
capital gains referred to in section
198 of the said Act exceeding ₹
125000
12.5%;
(K) on other income by way of
long-term capital gains [not being
long-term capital gains referred to
in Schedule II[Table: Sl. Nos. 14
12.5%;
122
and 17 [to the extent it relates to
section 10(36) of the Income-tax
Act, 1961 (43 of 1961)] of the said
Act
(L) on income by way of dividend,
referred to in section 207(1)[Table:
Sl. No. 2] of the said Act
10%;
(M) on income by way of dividend
other than the income referred to in
sub-item (b)(ii)(L)
20%;
(N) on the whole of the other
income
30%;
2.
In the case of a company,—
(a) where the company is a domestic company—
(i) on income by way of interest other than
“Interest on securities”
10%;
(ii) on income by way of winnings from
lotteries, puzzles, card games and other
games of any sort (other than winnings
from online games)
30%;
(iii) on income by way of winnings from
horse races
30%;
(iv) on income by way of net winnings
from online games
30%;
(v) on any other income
10%;
(b) where the company is not a domestic
company—
(i) on income by way of winnings from
lotteries, crossword puzzles, card games
and other games of any sort (other than
winnings from online games)
30%;
(ii) on income by way of winnings from
horse races
30%;
(iii) on income by way of net winnings
from online games
30%;
123
(iv) on income by way of interest
payable by Government or an Indian
concern on moneys borrowed or debt
incurred by Government or the Indian
concern in foreign currency (not being
income by way of interest referred to in
section 393(2)[Table: Sl. Nos. 2 to 5] of
the said Act)
20%;
(v) on income by way of royalty payable
by Government or an Indian concern in
pursuance of an agreement made by it
with the Government or the Indian
concern after the 31st March, 1976
where such royalty is in consideration
for the transfer of all or any rights
(including the granting of a licence) in
respect of copyright in any book
referred to in section 207(3)(a) of the
said Act, to the Indian concern, or in
respect of any computer software
referred to in section 207(3)(b) of the
said Act, to a person resident in India
20%;
(vi) on income by way of royalty [not
being royalty of the nature referred to in
item (b)(v)] payable by Government or
an Indian concern in pursuance of an
agreement made by it with the
Government or the Indian concern and
where such agreement is with an Indian
concern, the agreement is approved by
the Central Government or where it
relates to a matter included in the
industrial policy of the Government of
India, the agreement is in with that
policy—
(A) where the agreement is made
after the 31st March, 1961 but
before the 1st April, 1976
50%;
(B) where the agreement is made
after the 31st March, 1976
20%;
(vii) on income by way of fees for
technical
services
payable
by
Government or an Indian concern in
pursuance of an agreement made by it
with the Government or the Indian
concern and where such agreement is
124
with an Indian concern, the agreement is
approved by the Central Government or
where it relates to a matter included in
the industrial policy of the Government
of India, the agreement is in accordance
with that policy—
(A) where the agreement is made
after the 29th February, 1964 but
before the 1st April, 1976
50%;
(B) where the agreement is made
after the 31st March, 1976
20%;
(viii) on income by way of short-term
capital gains referred to in section 196
of the said Act
20%;
(ix) on income by way of long-term
capital gains referred to in section
197(4) of the said Act
12.5%;
(x) on income by way of long-term
capital gains referred to in section 198
of the said Act exceeding ₹ 125000
12.5%;
(xi) on other income by way of long-
term capital gains [not being long-term
capital gains referred to in Schedule
II[Table: Sl. Nos. 14 and 17 [to the
extent it relates to section 10(36) of the
Income-tax Act, 1961(43 of 1961)] of
the said Act
12.5%;
(xii) on income by way of dividend,
referred to in section 207(1)[Table: Sl.
No. 2] of the said Act
10%;
(xiii) on income by way of dividend
other than the income referred to in item
(b)(xii)
20%;
(xiv) on any other income
35%.
Note.—For the purposes of item 1(b)(i) of this Part, “investment
income” and “non-resident Indian” shall have the meanings respectively
assigned to them in section 212 of the said Act.
125
Surcharge on income-tax
The amount of income-tax deducted as per the provisions of this Part,
in the case of a person as specified in column B of the Table below, shall be
increased by a surcharge, for the purposes of the Union, calculated at the rate or
rates as specified in column C of the said Table, of such tax.
TABLE
Sl.
No.
Person in respect of which
deduction has to be made
Rate of surcharge
A
B
C
1.
(i) Every individual; or
(ii)
Hindu
undivided
family; or
(iii) association of persons,
except in a case of an
association
of
persons
consisting
of
only
companies as its members,
whether incorporated or
not; or
(iv) body of individuals,
whether incorporated or
not; or
(v) every artificial juridical
person
referred
to
in
section 2(77)(g) of the said
Act,
being a non-resident, except
in case where the income of
such person, is chargeable
to tax under section 202 of
the said Act.
(i) Where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
10000000 but does not exceed ₹
20000000, at the rate of 15%;
(iii) where the income or the aggregate
of such incomes (excluding dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
20000000 but does not exceed ₹
50000000, at the rate of 25%;
(iv) where the income or the aggregate
of such incomes (excluding the income
by way of dividend or income under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
50000000, at the rate of 37%;
126
(v) where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
20000000, but is not covered under
clauses (iii) and (iv), at the rate of 15%;
(vi) where the total income includes
dividend income or capital gains under
sections 196, 197 and 198 of the said
Act, the rate of surcharge on the amount
of income-tax computed in respect of
that part of income shall not exceed
15% and the clause (i) or (ii), as the case
may be, shall apply accordingly.
2.
(i) Every individual; or
(ii)
Hindu
undivided
family; or
(iii) association of persons,
except in a case of an
association
of
persons
consisting
of
only
companies as its members,
whether incorporated or
not; or
(iv) body of individuals,
whether incorporated or
not; or
(v) every artificial juridical
person
referred
to
in
section 2(77)(g) of the said
Act,
being a non-resident where
the income of such person
is chargeable to tax under
section 202 of the said Act.
(i) Where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
10000000 but does not exceed ₹
20000000, at the rate of 15%;
(iii) where the income or the aggregate
of such incomes (excluding dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
and subject to the deduction exceeds ₹
20000000, at the rate of 25%;
(iv) where the income or the aggregate
of such incomes (including dividend
income or capital gains under the
provisions of sections 196, 197 and 198
of the said Act) paid or likely to be paid
127
and subject to the deduction exceeds ₹
20000000 but is not covered under
clauses (iii), at the rate of 15%;
(v) where the total income includes
dividend income or capital gains under
sections 196, 197 and 198 of the said
Act, the rate of surcharge on the amount
of income-tax deducted in respect of
that part of income shall not exceed
15% and the clause (i) or (ii), as the case
may be, shall apply accordingly.
3.
Association
of
persons,
being a non-resident, and
consisting
of
only
companies as its members.
(i) Where the income or the aggregate of
such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the income or the aggregate of
such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
10000000, at the rate of 15%.
4.
Every co-operative society,
being a non-resident.
(i) Where the income or the aggregate
of such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
10000000 but does not exceed ₹
100000000, at the rate of 7%;
(ii) where the income or the aggregate
of such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
100000000, at the rate of 12%.
5.
Every firm, being a non-
resident.
Where the income or the aggregate of
such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
10000000, at the rate of 12%.
6.
Every company, other than
a domestic company.
(i) Where the income or the aggregate
of such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
10000000 but does not exceed ₹
100000000, at the rate of 2%;
(ii) where the income or the aggregate
of such incomes paid or likely to be paid
and subject to the deduction exceeds ₹
100000000, at the rate of 5%.
128
PART III
RATES FOR CHARGING INCOME-TAX IN CERTAIN CASES,
DEDUCTING INCOME-TAX FROM INCOME CHARGEABLE UNDER
THE HEAD “SALARIES” AND COMPUTING “ADVANCE TAX”
In cases in which income-tax has to be charged under section 316(5) of
the Income-tax Act, 2025 (30 of 2025) (hereafter in this Part referred to as the
said Act) or section 317(2) or 318 or 319 or 320(2) of the said Act or deducted
from, or paid on, from income chargeable under the head “Salaries” under
section 392 (other than sub-section (7) of the said section) of the said Act or
deducted under section 393(1)[Table: Sl. No. 8(iii)] of the said Act or in which
the “advance tax” payable under Chapter XIX-C of the said Act has to be
computed at the rate or rates in force, such income-tax or, as the case may be,
“advance tax” [not being “advance tax” in respect of any income chargeable to
tax under Part A, B, C or D of Chapter XIII or section 207 to 218, 223, 224, 307,
308, 311 or 334 of the said Act at the rates as specified in that Chapter or section
or surcharge, wherever applicable, on such “advance tax” in respect of any
income chargeable to tax under section 193, 194, 195, 199, 200, 201, 202, 203,
204, 206, 207, 208, 209, 210, 211, 214, 218 or 334 of the said Act] shall be
charged, deducted or computed at the following rate or rates:—
Paragraph A
(I) In the case of every individual other than the individual referred to
in items (II) and (III) of this Paragraph or Hindu undivided family or association
of persons or body of individuals, whether incorporated or not, or every artificial
juridical person referred to in section 2(77)(g) of the said Act, not being a case
to which Paragraphs B, C, D and E of this Part applies,—
Rates of income-tax
(1) where the total income does
not exceed ₹ 250000
Nil;
(2) where the total income
exceeds ₹ 250000 but does not
exceed ₹ 500000
5% of the amount by which the total
income exceeds ₹ 250000;
(3) where the total income
exceeds ₹ 500000 but does not
exceed ₹ 1000000
₹ 12500 plus 20% of the amount by
which the total income exceeds ₹
500000;
(4) where the total income
exceeds ₹ 1000000
₹ 112500 plus 30% of the amount by
which the total income exceeds ₹
1000000.
(II) In the case of every individual, being a resident in India, who is of
the age of sixty years or more but less than eighty years at any time during the
tax year,—
129
Rates of income-tax
(1) where the total income does
not exceed ₹ 300000
Nil;
(2) where the total income
exceeds ₹ 300000 but does not
exceed ₹ 500000
5% of the amount by which the total
income exceeds ₹ 300000;
(3) where the total income
exceeds ₹ 500000 but does not
exceed ₹ 1000000
₹ 10000 plus 20% of the amount by
which the total income exceeds ₹
500000;
(4) where the total income
exceeds ₹ 1000000
₹ 110000 plus 30% of the amount by
which the total income exceeds ₹
1000000.
(III) In the case of every individual, being a resident in India, who is of
the age of eighty years or more at any time during the tax year,—
Rates of income-tax
(1) where the total income does not
exceed ₹ 500000
Nil;
(2) where the total income exceeds ₹
500000 but does not exceed ₹
1000000
20% of the amount by which the
total income exceeds ₹ 500000;
(3) where the total income exceeds ₹
1000000
₹ 100000 plus 30% of the amount
by which the total income exceeds
₹ 1000000.
Paragraph B
In the case of every co-operative society,—
Rates of income-tax
(1) where the total income does
not exceed ₹ 10000
10% of the total income;
(2) where the total income
exceeds ₹ 10000 but does not
exceed ₹ 20000
₹ 1000 plus 20% of the amount by
which the total income exceeds ₹
10000;
(3) where the total income
exceeds ₹ 20000
₹ 3000 plus 30% of the amount by
which the total income exceeds ₹
20000.
Paragraph C
In the case of every firm,—
130
Rate of income-tax
On the whole of the total income
30%.
Paragraph D
In the case of every local authority,—
Rate of income-tax
On the whole of the total income
30%.
Paragraph E
In the case of a company,—
Rates of income-tax
I. In the case of a domestic
company,—
(i) where its total turnover or
the gross receipt in the tax year
2024-25 does not exceed ₹ 400
crores;
25% of the total
income;
(ii) other than that referred to
in item (i)
30% of the total
income.
II. In the case of a company other
than a domestic company,—
(i) on so much of the total
income as consists of,—
(a) royalties received from
Government
or
an
Indian
concern in pursuance of an
agreement made by it with the
Government
or
the
Indian
concern after the 31st March,
1961 but before the 1st April,
1976; or
(b) fees for rendering
technical services received from
Government
or
an
Indian
concern in pursuance of an
agreement made by it with the
Government
or
the
Indian
concern after the 29th February,
50%;
131
1964 but before the 1st April,
1976,
and where such agreement has, in
either case, been approved by the
Central Government;
(ii) on the balance, if any, of
the total income
35%.
Paragraph F
Surcharge on income-tax
The amount of income-tax computed in accordance with the Paragraphs
A to E, or the provisions of section 196, 197 or 198 of the said Act, in the case
of person as specified in column B in Table 1 below, shall be increased by a
surcharge, for the purposes of the Union, calculated at the rate or rates as
specified in column C of the said Table, of such income-tax.
TABLE 1
Sl.
No.
Person
Rate of surcharge
A
B
C
1.
(i) Every individual; or
(ii) Hindu undivided family;
or
(iii) association of persons,
except in a case of an
association
of
persons
consisting
of
only
companies as its members,
whether incorporated or not;
or
(iv) body of individuals,
whether incorporated or not;
or
(v) every artificial juridical
person referred to in section
2(77)(g) of the said Act.
(i)
Where
the
total
income
(including dividend income or
capital gains under the provisions
of sections 196, 197 and 198 of the
said Act) exceeds ₹ 5000000 but
does not exceed ₹ 10000000, at the
rate of 10%;
(ii)
where
the
total
income
(including dividend income or
capital gains under the provisions
of sections 196, 197 and 198 of the
said Act) exceeds ₹ 10000000 but
does not exceed ₹ 20000000, at the
rate of 15%;
(iii) where the total income
(excluding dividend income or
capital gains under the provisions
of sections 196, 197 and 198 of the
said Act) exceeds ₹ 20000000 but
does not exceed ₹ 50000000, at the
rate of 25%;
(iv) where the total income
(excluding dividend income or
capital gains under the provisions
132
of sections 196, 197 and 198 of the
said Act) exceeds ₹ 50000000, at
the rate of 37%;
(v)
where
the
total
income
(including dividend income or
capital gains under the provisions
of sections 196, 197 and 198 of the
said Act) exceeds ₹ 20000000, but
is not covered in (iii) and (iv)
above, at the rate of 15%;
(vi) where the total income
includes any dividend income or
capital gains under the provisions
of sections 196, 197 and 198 of the
said Act, the rate of surcharge on
the
amount
of
income-tax
computed in respect of that part of
income shall not exceed 15% and
the provisions of clause (i) or (ii),
as the case may be, shall apply
accordingly.
2.
Association
of
persons
consisting
of
only
companies as its members.
(i) Where the total income exceeds
₹ 5000000 but does not exceed ₹
10000000, at the rate of 10%;
(ii) where the total income exceeds
₹ 10000000, at the rate of 15%.
3.
Every co-operative society.
(i) Where the total income exceeds
₹ 10000000 but does not exceed ₹
100000000, at the rate of 7%;
(ii) where the total income exceeds
₹ 100000000, at the rate of 12%.
4.
Every
firm
or
local
authority.
Where the total income exceeds ₹
10000000, at the rate of 12%.
5.
Every domestic company.
(i) Where the total income exceeds
₹ 10000000 but does not exceed ₹
100000000, at the rate of 7%;
(ii) where the total income exceeds
₹ 100000000, at the rate of 12%.
6.
Every company, other than a
domestic company.
(i) Where the total income exceeds
₹ 10000000 but does not exceed ₹
100000000, at the rate of 2%;
133
(ii) where the total income exceeds
₹ 100000000, at the rate of 5%.
Further, in respect of the persons mentioned in column B of the Table 2
below, having total income exceeding the amount as specified in column C of
the said Table but does not exceed the amount specified in column D thereof,
the total amount payable as income-tax and surcharge thereon shall not exceed
the amount determined as per the following formula:—
Wa = Ua + Va
where,––
Wa = the total amount beyond which the total amount payable as income-
tax and surcharge thereon shall not exceed;
Ua = the total amount payable as income-tax and surcharge, if applicable,
on an amount as specified in column C of the Table 2 below; and
Va = the total income – amount as specified in column C of the said Table.
TABLE 2
Sl.
No.
Person
Amount
Amount
A
B
C
D
1.
Table 1: Sl. No.
1.B.
₹ 5000000.
₹ 10000000.
₹10000000.
₹ 20000000.
₹ 20000000.
₹ 50000000.
₹ 50000000.
-
2.
Table 1: Sl. No.
2.B.
₹ 5000000.
₹ 10000000.
₹10000000.
-
3.
Table 1: Sl. No.
3.B.
₹ 10000000.
₹ 100000000.
₹ 100000000.
-
4.
Table 1: Sl. No.
4.B.
₹ 10000000.
-
5.
Table 1: Sl. No.
5.B and 6.B.
₹10000000.
₹100000000.
₹ 100000000.
-
134
PART IV
RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME
A.–– UNDER THE INCOME-TAX ACT, 1961
[See section 2(7)(b)]
Rule 1.—(1) Agricultural income of the nature referred to in section
2(1A)(a) of the Income-tax Act, 1961 (43 of 1961) (hereafter in this Part IV-A
referred to as the said Act) shall be computed as if it were income chargeable to
income-tax under the said Act under the head “Income from other sources” and
the provisions of sections 57 to 59 of the said Act shall, so far as may be, apply
accordingly.
(2) For the purposes of sub-rule (1), section 58(2) of the said Act shall
apply subject to the modification that the reference to section 40A of the said
Act therein shall be construed as not including a reference to sub-sections (3),
(3A) and (4) of section 40A.
Rule 2.—Agricultural income of the nature referred to in section
2(1A)(b) or (c) of the said Act [other than income derived from any building
required as a dwelling-house by the receiver of the rent or revenue of the
cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)]
shall be computed as if it were income chargeable to income-tax under the said
Act under the head “Profits and gains of business or profession” and the
provisions of sections 30, 31, 32, 36, 37, 38, 40, 40A [other than sub-sections
(3), (3A) and (4) thereof], 41, 43, 43A, 43B and 43C of the said Act shall, so far
as may be, apply accordingly.
Rule 3.—Agricultural income of the nature referred to in section
2(1A)(c) of the said Act, being income derived from any building required as a
dwelling-house by the receiver of the rent or revenue or the cultivator or the
receiver of rent-in-kind referred to in the said sub-clause (c) shall be computed
as if it were income chargeable to income-tax under the said Act under the head
“Income from house property” and the provisions of sections 23 to 27 of that
Act shall, so far as may be, apply accordingly.
Rule 4.—Irrespective of anything contained in any other provisions of
these rules, in a case—
(a) where the assessee derives income from sale of tea grown
and manufactured by him in India, such income shall be computed as
per rule 8 of the Income-tax Rules, 1962, and 60% of such income shall
be regarded as the agricultural income of the assessee;
(b) where the assessee derives income from sale of centrifuged
latex or cenex or latex based crepes (such as pale latex crepe) or brown
crepes (such as estate brown crepe, re-milled crepe, smoked blanket
crepe or flat bark crepe) or technically specified block rubbers
manufactured or processed by him from rubber plants grown by him in
135
India, such income shall be computed as per rule 7A of the Income-tax
Rules, 1962, and 65% of such income shall be regarded as the
agricultural income of the assessee;
(c) where the assessee derives income from sale of coffee grown
and manufactured by him in India, such income shall be computed as
per rule 7B of the Income-tax Rules, 1962, and 60% or 75%, as the case
may be, of such income shall be regarded as the agricultural income of
the assessee.
Rule 5.—Where the assessee is a member of an association of persons
or a body of individuals (other than a Hindu undivided family, a company or a
firm) which in the previous year has either no income chargeable to tax under
the said Act or has total income not exceeding the maximum amount not
chargeable to tax in the case of an association of persons or a body of individuals
(other than a Hindu undivided family, a company or a firm) but has any
agricultural income then, the agricultural income or loss of the association or
body shall be computed in accordance with these rules and the share of the
assessee in the agricultural income or loss so computed shall be regarded as the
agricultural income or loss of the assessee.
Rule 6.—(1) Where the result of the computation for the previous year
in respect of any source of agricultural income is a loss, such loss shall be set
off against the income of the assessee, if any, for that previous year from any
other source of agricultural income.
(2) Irrespective of anything contained in sub-rule (1), where the assessee
is a member of an association of persons or a body of individuals and the share
of the assessee in the agricultural income of the association or body, as the case
may be, is a loss, such loss shall not be set off against any income of the assessee
from any other source of agricultural income.
Rule 7.—Any sum payable by the assessee on account of any tax levied
by the State Government on the agricultural income shall be deducted in
computing the agricultural income.
Rule 8.—(1) Where the assessee has, in the previous year relevant to the
assessment year commencing on the 1st April, 2026, any agricultural income
and the net result of the computation of the agricultural income of the assessee
for any one or more of the previous years relevant to the assessment years
commencing on the 1st April, 2018 or the 1st April, 2019 or the 1st April, 2020
or the 1st April, 2021 or the 1st April, 2022 or the 1st April, 2023 or the 1st
April, 2024, or the 1st April, 2025, is a loss, then, for the purposes of section
2(2) of this Act,—
(i) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2018, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2019 or the 1st April, 2020 or the 1st April, 2021 or the 1st
136
April, 2022 or the 1st April, 2023 or the 1st April, 2024, or the 1st April,
2025;
(ii) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2019, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2020 or the 1st April, 2021 or the 1st April, 2022 or the 1st
April, 2023 or the 1st April, 2024, or the 1st April, 2025;
(iii) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2020, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2021 or the 1st April, 2022 or the 1st April, 2023 or the 1st
April, 2024, or the 1st April, 2025;
(iv) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2021, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2022 or the 1st April, 2023 or the 1st April, 2024, or the 1st
April, 2025;
(v) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2022, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2023 or the 1st April, 2024, or the 1st April, 2025;
(vi) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2023, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2024, or the 1st April, 2025;
(vii) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2024, to the extent, if
any, such loss has not been set off against the agricultural income for
the previous year relevant to the assessment year commencing on the
1st April, 2025;
(viii) the loss so computed for the previous year relevant to the
assessment year commencing on the 1st April, 2025,
shall be set off against the agricultural income of the assessee for the previous
year relevant to the assessment year commencing on the 1st April, 2026.
(2) Where any person deriving any agricultural income from any source
has been succeeded in such capacity by another person, otherwise than by
inheritance, nothing in sub-rule (1) shall entitle any person, other than the person
incurring the loss, to have it set off under sub-rule (1).
(3) Irrespective of anything contained in this rule, no loss which has not
been determined by the Assessing Officer under the provisions of these rules or
the rules contained in the First Schedule to the Finance Act, 2018 (13 of 2018)
or the First Schedule to the Finance (No. 2) Act, 2019 (23 of 2019) or the First
Schedule to the Finance Act, 2020 (12 of 2020) or the First Schedule to the
137
Finance Act, 2021 (13 of 2021) or the First Schedule to the Finance Act, 2022
(6 of 2022) or the First Schedule to the Finance Act, 2023 (8 of 2023) or the
First Schedule to the Finance (No. 2) Act, 2024 (15 of 2024) or the First
Schedule to the Finance Act, 2025 (7 of 2025) shall be set off under sub-rule (1).
Rule 9.—Where the net result of the computation made as per these rules
is a loss, the loss so computed shall be ignored and the net agricultural income
shall be deemed to be nil.
Rule 10.—The provisions of the said Act relating to procedure for
assessment (including the provisions of section 288A relating to rounding off of
income) shall, with the necessary modifications, apply in relation to the
computation of the net agricultural income of the assessee as they apply in
relation to the assessment of the total income.
Rule 11.—For the purposes of computing the net agricultural income of
the assessee, the Assessing Officer shall have the same powers as he has under
the said Act for the purposes of assessment of the total income.
B.–– UNDER THE INCOME-TAX ACT, 2025
[See section 3(18)(c)]
Rule 1.—(1) Agricultural income of the nature referred to in section
2(5)(a) of the Income-tax Act, 2025 (30 of 2025) (hereafter in this Part IV-B
referred to as the said Act) shall be computed as if it were income chargeable to
income-tax under the said Act under the head “Income from other sources” and
the provisions of sections 93 to 95 of the said Act shall, so far as may be, apply
accordingly.
(2) For the purposes of sub-rule (1), section 94(2) of the said Act shall
apply subject to the modification that the reference to section 36 of the said Act
therein shall be construed as not including a reference to sub-sections (4), (5),
(6), (7) and (8) of section 36.
Rule 2.—Agricultural income of the nature referred to in section 2(5)(b)
or (c) of the said Act [other than income derived from any building required as
a dwelling-house by the receiver of the rent or revenue of the cultivator or the
receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed
as if it were income chargeable to income-tax under the said Act under the head
“Profits and gains of business or profession” and the provisions of sections 28,
29, 30, 31, 32, 33, 34, 35, 36 [other than sub-sections (4), (5), (6), (7) and (8)
thereof], 37, 38, 39, 40, 42 and 66 of the said Act shall, so far as may be, apply
accordingly.
Rule 3.—Agricultural income of the nature referred to in section 2(5)(c)
of the said Act, being income derived from any building required as a dwelling-
house by the receiver of the rent or revenue or the cultivator or the receiver of
rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were
income chargeable to income-tax under the said Act under the head “Income
138
from house property” and the provisions of sections 21 to 25 of the said Act
shall, so far as may be, apply accordingly.
Rule 4.—Irrespective of anything contained in any other provisions of
these rules, in a case—
(a) where the assessee derives income from sale of tea grown
and manufactured by him in India, such income shall be computed as
per rules notified for the purposes of the said Act, and 60% of such
income shall be regarded as the agricultural income of the assessee;
(b) where the assessee derives income from sale of centrifuged
latex or cenex or latex based crepes (such as pale latex crepe) or brown
crepes (such as estate brown crepe, re-milled crepe, smoked blanket
crepe or flat bark crepe) or technically specified block rubbers
manufactured or processed by him from rubber plants grown by him in
India, such income shall be computed as per rules notified for the
purposes of the said Act, and 65% of such income shall be regarded as
the agricultural income of the assessee;
(c) where the assessee derives income from sale of coffee grown
and manufactured by him in India, such income shall be computed as
per rules notified for the purposes of the said Act, and 60% or 75%, as
the case may be, of such income shall be regarded as the agricultural
income of the assessee.
Rule 5.—Where the assessee is a member of an association of persons
or a body of individuals (other than a Hindu undivided family, a company or a
firm) which in the tax year has either no income chargeable to tax under the said
Act or has total income not exceeding the maximum amount not chargeable to
tax in the case of an association of persons or a body of individuals (other than
a Hindu undivided family, a company or a firm) but has any agricultural income
then, the agricultural income or loss of the association or body shall be computed
in accordance with these rules and the share of the assessee in the agricultural
income or loss so computed shall be regarded as the agricultural income or loss
of the assessee.
Rule 6.—(1) Where the result of the computation for the tax year in
respect of any source of agricultural income is a loss, such loss shall be set off
against the income of the assessee, if any, for that tax year from any other source
of agricultural income.
(2) Irrespective of anything contained in sub-rule (1), where the assessee
is a member of an association of persons or a body of individuals and the share
of the assessee in the agricultural income of the association or body, as the case
may be, is a loss, such loss shall not be set off against any income of the assessee
from any other source of agricultural income.
Rule 7.—Any sum payable by the assessee on account of any tax levied
by the State Government on the agricultural income shall be deducted in
computing the agricultural income.
139
Rule 8.—(1) Where the assessee has, in the tax year commencing on the
1st April, 2026, or, if by virtue of any provision of the said Act, income-tax is
to be charged in respect of the income of a period other than the tax year, in such
other period, any agricultural income and the net result of the computation of
the agricultural income of the assessee for any one or more of the tax years
commencing on the 1st April, 2018 or the 1st April, 2019 or the 1st April, 2020
or the 1st April, 2021 or the 1st April, 2022 or the 1st April, 2023 or the 1st
April, 2024, or the 1st April, 2025, is a loss, then, for the purposes of section
2(2) or (10) of this Act,—
(i) the loss so computed for the tax year commencing on the 1st
April, 2018, to the extent, if any, such loss has not been set off against
the agricultural income for the tax year commencing on the 1st April,
2019 or the 1st April, 2020 or the 1st April, 2021 or the 1st April, 2022
or the 1st April, 2023 or the 1st April, 2024, or the 1st April, 2025;
(ii) the loss so computed for the tax year commencing on the
1st April, 2019, to the extent, if any, such loss has not been set off
against the agricultural income for the tax year commencing on the 1st
April, 2020 or the 1st April, 2021 or the 1st April, 2022 or the 1st April,
2023 or the 1st April, 2024, or the 1st April, 2025;
(iii) the loss so computed for the tax year commencing on the
1st April, 2020, to the extent, if any, such loss has not been set off
against the agricultural income for the tax year commencing on the 1st
April, 2021 or the 1st April, 2022 or the 1st April, 2023 or the 1st April,
2024, or the 1st April, 2025;
(iv) the loss so computed for the tax year commencing on the
1st April, 2021, to the extent, if any, such loss has not been set off
against the agricultural income for the tax year commencing on the 1st
April, 2022 or the 1st April, 2023 or the 1st April, 2024, or the 1st April,
2025;
(v) the loss so computed for the tax year commencing on the 1st
April, 2022, to the extent, if any, such loss has not been set off against
the agricultural income for the tax year commencing on the 1st April,
2023 or the 1st April, 2024, or the 1st April, 2025;
(vi) the loss so computed for the tax year commencing on the
1st April, 2023, to the extent, if any, such loss has not been set off
against the agricultural income for the tax year commencing on the 1st
April, 2024, or the 1st April, 2025;
(vii) the loss so computed for the tax year commencing on the
1st April, 2024, to the extent, if any, such loss has not been set off
against the agricultural income for the tax year commencing on the 1st
April, 2025;
140
(viii) the loss so computed for the tax year commencing on the
1st April, 2025,
shall be set off against the agricultural income of the assessee for the tax year
commencing on the 1st April, 2026.
(2) Where any person deriving any agricultural income from any source
has been succeeded in such capacity by another person, otherwise than by
inheritance, nothing in sub-rule (1) shall entitle any person, other than the person
incurring the loss, to have it set off under sub-rule (1).
(3) Irrespective of anything contained in this rule, no loss which has not
been determined by the Assessing Officer under the provisions of these rules or
the rules contained in the First Schedule to the Finance Act, 2018 (13 of 2018)
or the First Schedule to the Finance (No. 2) Act, 2019 (23 of 2019) or the First
Schedule to the Finance Act, 2020 (12 of 2020) or the First Schedule to the
Finance Act, 2021 (13 of 2021) or the First Schedule to the Finance Act, 2022
(6 of 2022) or the First Schedule to the Finance Act, 2023 (8 of 2023) or the
First Schedule to the Finance (No. 2) Act, 2024 (15 of 2024) or the First
Schedule to the Finance Act, 2025 (7 of 2025) shall be set off under sub-rule (1).
Rule 9.—Where the net result of the computation made as per these rules
is a loss, the loss so computed shall be ignored and the net agricultural income
shall be deemed to be nil.
Rule 10.—The provisions of the said Act relating to procedure for
assessment (including the provisions of section 516 relating to rounding off of
income) shall, with the necessary modifications, apply in relation to the
computation of the net agricultural income of the assessee as they apply in
relation to the assessment of the total income.
Rule 11.—For the purposes of computing the net agricultural income of
the assessee, the Assessing Officer shall have the same powers as he has under
the said Act for the purposes of assessment of the total income.
Rule 12.— Where a reference is made in this Part to any tax year
commencing on the 1st April 2025 or to any earlier tax year, the same shall be
construed as a reference to the corresponding previous year under the Income-
tax Act, 1961 (43 of 1961) as provided in section 536(3) of the said Act.
141
THE SECOND SCHEDULE
[See section 136(a)]
In the First Schedule to the Customs Tariff Act, in Chapter 66,––
(i) for the entry in column (4) occurring against tariff items 6601
91 00 and 6601 99 00, the entry “20% or Rs. 60 per piece, whichever
is higher” shall be substituted;
(ii) for the entry in column (4) occurring against tariff items 6603
20 00, 6603 90 10 and 6603 90 90, the entry “10% or Rs. 25 per kg.,
whichever is higher” shall be substituted.
142
THE THIRD SCHEDULE
[See section 136(b)]
In the First Schedule to the Customs Tariff Act, in Chapter 98, for the
entry in column (4) occurring against all the tariff items of heading 9804,
the entry “10%” shall be substituted.
143
THE FOURTH SCHEDULE
[See section 136(c)(i)]
In the First Schedule to the Customs Tariff Act,––
Tariff
Item
Description of
goods
Unit
Rate of duty
Standard
Preferential
(1)
(2)
(3)
(4)
(5)
(1)
in Chapter 3, in heading 0306, for tariff item 0306 19 00 and the entries relating thereto, the following
shall be substituted, namely:—
“0306 19
-- Other :
0306 19 10
--- Krill
kg.
15%
-
0306 19 90
--- Other
kg.
30%
-”;
(2)
in Chapter 8,––
(i) in heading 0802, for tariff item 0802 99 00 and the entries relating thereto, the following
shall be substituted, namely:—
“0802 99
-- Other :
0802 99 10
--- Pecan nuts
kg.
30%
90%
0802 99 90
--- Other
kg.
100%
90%”;
(ii) in heading 0810, for tariff item 0810 40 00 and the entries relating thereto, the following
shall be substituted, namely:—
“0810 40
- Cranberries, bilberries and other fruits of the
genus Vaccinium :
0810 40 10
--- Cranberries
kg.
10%
20%
0810 40 20
--- Blueberries
kg.
10%
20%
0810 40 90
--- Other
kg.
30%
20%”;
144
(iii) in heading 0811, for tariff items 0811 90 10 to 0811 90 90 and the entries relating thereto,
the following shall be substituted, namely:—
“--- Containing added sugar :
0811 90 11
---- Cranberries
kg.
10%
20%
0811 90 12
---- Blueberries
kg.
10%
20%
0811 90 19
---- Other
kg.
30%
20%
--- Other :
0811 90 91
---- Cranberries
kg.
10%
20%
0811 90 92
---- Blueberries
kg.
10%
20%
0811 90 99
---- Other
kg.
30%
20%”;
(iv) in heading 0813, after tariff item 0813 40 20 and the entries relating thereto, the following
shall be inserted, namely:—
“0813 40 30
--- Cranberries
kg.
10%
20%
0813 40 40
--- Blueberries
kg.
10%
20%”;
(3)
in Chapter 12, in heading 1207, after tariff item 1207 99 40 and the entries relating thereto, the following
shall be inserted, namely:—
“1207 99 50
--- Shea nuts
kg.
15%
20%”;
(4)
in Chapter 13, in heading 1302, for tariff items 1302 19 19 to 1302 19 30 and the entries relating thereto,
the following shall be substituted, namely:—
“1302 19 21
---- Of Withania somnifera
kg.
30%
-
1302 19 22
---- Of Bacopa monnieri
kg.
30%
-
1302 19 23
---- Of Berberis aristata
kg.
30%
-
1302 19 24
---- Of Boswellia serrata
kg.
30%
-
1302 19 25
---- Of Emblica officinalis
kg.
30%
-
1302 19 26
---- Of Ocimum sanctum
kg.
30%
-
145
1302 19 27
---- Of Capsicum annuum
kg.
30%
-
1302 19 28
---- Of Phaseolus vulgaris
kg.
30%
-
1302 19 31
---- Of Piper nigrum
kg.
30%
-
1302 19 32
---- Of Pterocarpus marsupium
kg.
30%
-
1302 19 33
---- Of Punica granatum
kg.
30%
-
1302 19 34
---- Of Salacia reticulata
kg.
30%
-
1302 19 35
---- Of Tagetes erecta
kg.
30%
-
1302 19 36
---- Of Terminalia bellirica
kg.
30%
-
1302 19 37
---- Of Curcuma longa
kg.
30%
-
1302 19 38
---- Of Zingiber officinale
kg.
30%
-
1302 19 39
---- Other
kg.
30%
-
1302 19 50
--- Cashew shell liquid (CNSL), crude
kg.
30%
-
1302 19 60
--- Purified and distilled CNSL (Cardanol)
kg.
30%
-”;
(5)
in Chapter 20, in heading 2008,––
(i) for tariff item 2008 93 00 and the entries relating thereto, the following shall be
substituted, namely:—
“2008 93
-- Cranberries
(Vaccinium
macrocarpon,
Vaccinium
oxycoccos);
lingonberries
(Vaccinium vitis-idaea) :
2008 93 10
--- Cranberries
(Vaccinium
macrocarpon,
Vaccinium oxycoccos)
kg.
5%
-
2008 93 90
--- Other
kg.
30%
-”;
(ii) after tariff item 2008 99 14 and the entries relating thereto, the following shall be inserted,
namely:—
“2008 99 15
---- Blueberries
kg.
10%
-”;
(iii) after tariff item 2008 99 94 and the entries relating thereto, the following shall be inserted,
namely:—
“2008 99 95
---- Blueberries
kg.
10%
-”;
146
(6)
in Chapter 21, in heading 2106, for tariff item 2106 90 50 and the entries relating thereto, the following
shall be substituted, namely:—
“--- Compound preparations for making beverages :
2106 90 51
---- Compound alcoholic preparations of a kind used
for the manufacture of beverages, of an alcoholic
strength by volume exceeding 0.5% vol.,
determined at 20 ℃
kg.
150%
-
2106 90 59
---- Other
kg.
50%
-”;
(7)
in Chapter 22, in heading 2202, for tariff items 2202 99 20 to 2202 99 90 and the entries relating thereto,
the following shall be substituted, namely:—
“--- Fruit pulp or fruit juice based drinks :
2202 99 21
---- Cranberry products
l
10%
-
2202 99 29
---- Other
l
30%
-
--- Beverages containing milk :
2202 99 31
---- Cranberry products
l
10%
-
2202 99 39
---- Other
l
30%
-
--- Other :
2202 99 91
---- Cranberry products
l
10%
-
2202 99 99
---- Other
l
30%
-”;
(8)
in Chapter 25, in heading 2529, for tariff item 2529 22 00 and the entries relating thereto, the following
shall be substituted, namely:—
“2529 22
-- Containing by weight more than 97 % of calcium
fluoride :
2529 22 10
--- Acid grade
kg.
2.5%
-
2529 22 90
--- Other
kg.
5%
-”;
(9)
in Chapter 26, in heading 2615, for tariff item 2615 10 00 and the entries relating thereto, the following
shall be substituted, namely:—
147
“2615 10
- Zirconium ores and concentrates :
2615 10 10
--- Hafnium
kg.
Free
-
2615 10 90
--- Other
kg.
Free
-”;
(10)
in Chapter 28, in heading 2841, for tariff item 2841 90 00 and the entries relating thereto, the following
shall be substituted, namely:—
“2841 90
- Other :
2841 90 10
--- Ammonium metavanadate
kg.
2.5%
-
2841 90 90
--- Other
kg.
7.5%
-”;
(11) in Chapter 29,—
(i)
in heading 2905, tariff item 2905 14 30 and the entries relating thereto shall be
omitted;
(ii)
in heading 2915,––
(a) for tariff item 2915 90 10 and the entries relating thereto, the following shall be
substituted, namely:—
“--- Acetyl chloride, Propionyl chloride :
2915 90 11
---- Acetyl chloride
kg.
7.5%
-
2915 90 12
---- Propionyl chloride
kg.
7.5%
-”;
(b) after tariff item 2915 90 95 and the entries relating thereto, the following shall be
inserted, namely:—
“2915 90 96
---- Triethyl orthoformate
kg.
5%
-”;
(iii) in heading 2916, for tariff item 2916 34 00 and the entries relating thereto, the following shall
be substituted, namely:—
148
“2916 34
-- Phenylacetic acid and its salts :
2916 34 10
--- Phenylacetic acid
kg.
7.5%
-
2916 34 90
--- Other
kg.
7.5%
-”;
(iv) in heading 2917,–
(a) for tariff item 2917 19 20 and the entries relating thereto, the following shall be
substituted, namely:—
“--- Malonic acid, its salts and esters :
2917 19 21
---- Malonic acid
kg.
7.5%
-
2917 19 22
---- Diethyl malonate
kg.
5%
-
2917 19 29
---- Other
kg.
7.5%
-”;
(b) for the entry in column (2) occurring against tariff item 2917 19 70, the entry “---
Ethoxy methylene malonate” shall be substituted;
(v) in heading 2918,––
(a)
after tariff item 2918 30 60 and the entries relating thereto, the following shall be
inserted, namely:—
“2918 30 70
--- Methyl alpha-phenylacetoacetate
kg.
7.5%
-”;
(b)
after tariff item 2918 99 30 and the entries relating thereto, the following shall be
inserted, namely:—
“2918 99 40
--- P-2-P methyl glycidic acid and its esters
kg.
7.5%
-”;
(vi) in heading 2922,––
(a) after tariff item 2922 19 19 and the entries relating thereto, the following shall be
inserted, namely:—
“2922 19 30
--- DL-2 Aminobutanol
kg.
5%
-”;
149
(b) for tariff item 2922 43 00 and the entries relating thereto, the following shall be
substituted, namely:—
“2922 43
-- Anthranilic acid and its salts :
2922 43 10
--- Anthranilic acid
kg.
7.5%
-
2922 43 90
--- Other
kg.
7.5%
-”;
(vii) in heading 2924, for tariff item 2924 29 90 and the entries relating thereto, the following
shall be substituted, namely:—
“--- Other :
2924 29 91
---- Alpha-phenylacetoacetamide
kg.
7.5%
-
2924 29 99
---- Other
kg.
7.5%
-”;
(viii) in heading 2927, after tariff item 2927 00 10 and the entries relating thereto, the following
shall be inserted, namely:—
“2927 00 20
--- Azobisisobutyronitrile (AIBN)
kg.
7.5%
-”;
(ix) in heading 2932,––
(a) after tariff item 2932 20 30 and the entries relating thereto, the following shall be
inserted, namely:—
“2932 20 40
--- Gibberellic acid
kg.
5%
-
2932 20 50
--- Aceto butyrolactone
kg.
5%
-”;
(b) after tariff item 2932 99 20 and the entries relating thereto, the following shall be
inserted, namely:—
“2932 99 30
--- Artemisinin
kg.
5%
-
2932 99 40
--- 3,4-MDP-2-P methyl glycidic acid
kg.
7.5%
-
2932 99 50
--- 3,4-MDP-2-P methyl glycidate
kg.
7.5%
-”;
150
(x) in heading 2933,––
(a)
for tariff item 2933 32 10 and the entries relating thereto, the following shall be
substituted, namely:—
“2933 32 20
--- Piperidine
kg.
7.5%
-
2933 32 30
--- Mepiquate chloride
kg.
7.5%
-”;
(b)
for the entry in column (2) occurring against tariff item 2933 37 00, the entry “--
N-Phenethyl-4-piperidone (NPP)” shall be substituted;
(c)
after tariff item 2933 39 60 and the entries relating thereto, the following shall be
inserted, namely:—
“2933 39 70
--- 4-Piperidone
kg.
7.5%
-
2933 39 80
--- 1-Boc-4-piperidone
kg.
7.5%
-”;
(d)
for tariff item 2933 39 90 and the entries relating thereto, the following shall be
substituted, namely:—
“--- Other :
2933 39 91
---- Norfentanyl
kg.
7.5%
-
2933 39 99
---- Other
kg.
7.5%
-”;
(xi) in heading 2934, after tariff item 2934 99 40 and the entries relating thereto, the following
shall be inserted, namely:—
“2934 99 50
--- Thymidine
kg.
5%
-”;
(xii) in heading 2939,––
(a)
for tariff items 2939 41 00 to 2939 42 00 and the entries relating thereto, the
following shall be substituted, namely:—
“2939 41
-- Ephedrine and its salts :
2939 41 10
--- Ephedrine
kg.
7.5%
10%
2939 41 90
--- Other
kg.
7.5%
10%
2939 42
-- Pseudoephedrine (INN) and its salts :
151
2939 42 10
--- Pseudoephedrine (INN)
kg.
7.5%
10%
2939 42 90
--- Other
kg.
7.5%
10%”;
(b)
for tariff item 2939 44 00 and the entries relating thereto, the following shall be
substituted, namely:—
“2939 44
-- Norephedrine and its salts :
2939 44 10
--- Norephedrine
kg.
7.5%
-
2939 44 90
--- Other
kg.
7.5%
-”;
(c)
for tariff item 2939 63 00 and the entries relating thereto, the following shall be
substituted, namely:—
“2939 63
-- Lysergic acid and its salts :
2939 63 10
--- Lysergic acid
kg.
7.5%
-
2939 63 90
--- Other
kg.
7.5%
-”;
(12) in Chapter 33, in heading 3302, for tariff items 3302 10 10 to 3302 10 90 and the entries relating thereto,
the following shall be substituted, namely:—
“--- Synthetic flavouring essences :
3302 10 11
---- Compound alcoholic preparations of a kind used
for the manufacture of beverages, of an alcoholic
strength by volume exceeding 0.5 % vol.,
determined at 20 ℃
kg.
20%
-
3302 10 19
---- Other
kg.
10%
-
--- Other :
3302 10 91
---- Compound alcoholic preparations of a kind used
for the manufacture of beverages, of an alcoholic
strength by volume exceeding 0.5 % vol.,
determined at 20 ℃
kg.
20%
-
3302 10 99
---- Other
kg.
10%
-”;
152
(13) in Chapter 39, in heading 3923, for tariff item 3923 29 90 and the entries relating thereto, the following
shall be substituted, namely:—
“--- Other :
3923 29 91
---- Biodegradable
kg.
15%
-
3923 29 99
---- Other
kg.
15%
-”;
(14) in Chapter 41,––
(i) in heading 4104, for tariff items 4104 11 00 to 4104 19 00 and the entries relating thereto,
the following shall be substituted, namely:—
“4104 11
-- Full grains, unsplit; grain splits :
4104 11 10
--- Wet blues
kg.
Free
-
4104 11 90
--- Other
kg.
10%
-
4104 19
-- Other :
4104 19 10
--- Wet blues
kg.
Free
-
4104 19 90
--- Other
kg.
10%
-”;
(ii) in heading 4105, for tariff item 4105 10 00 and the entries relating thereto, the following
shall be substituted, namely:—
“4105 10
- In the wet state (including wet-blue) :
4105 10 10
--- Wet blues
kg.
Free
-
4105 10 90
--- Other
kg.
10%
-”;
(iii) in heading 4106,––
(a) for tariff item 4106 21 00 and the entries relating thereto, the following shall be
substituted, namely:—
“4106 21
-- In the wet state (including wet-blue) :
4106 21 10
--- Wet blues
kg.
Free
-
153
4104 21 90
--- Other
kg.
10%
-”;
(b) for tariff item 4106 31 00 and the entries relating thereto, the following shall be
substituted, namely:—
“4106 31
-- In the wet state (including wet-blue) :
4106 31 10
--- Wet blues
kg.
Free
-
4104 31 90
--- Other
kg.
10%
-”;
(c) for tariff item 4106 91 00 and the entries relating thereto, the following shall be
substituted, namely:—
“4106 91
-- In the wet state (including wet-blue) :
4106 91 10
--- Wet blues
kg.
Free
-
4104 91 90
--- Other
kg.
10%
-”;
(15) in Chapter 47, in heading 4702, for tariff item 4702 00 00 and the entries relating thereto, the following
shall be substituted, namely:—
“4702
CHEMICAL WOOD PULP, DISSOLVING
GRADES
4702 00
- Chemical wood pulp, dissolving grades :
4702 00 10
--- Rayon grade wood pulp
kg.
2.5%
-
4702 00 90
--- Other
kg.
5%
-”;
(16) in Chapter 48, in heading 4823, after tariff item 4823 90 30 and the entries relating thereto, the following
shall be inserted, namely:—
“4823 90 40
--- Kites
kg.
20%
-”;
(17) in Chapter 73, —
154
(i) in heading 7305,—
(a) for tariff items 7305 11 19 to 7305 11 29 and the entries relating thereto, the following
shall be substituted, namely:—
“7305 11 19
---- Other
kg.
15%
-
--- Non-galvanised pipes, of iron :
7305 11 31
---- Clad, plated or coated
kg.
15%
-
7305 11 39
---- Other
kg.
15%
-
--- Non-galvanised pipes, other :
7305 11 41
---- Clad, plated or coated
kg.
15%
-
7305 11 49
---- Other
kg.
15%
-”;
(b) for tariff items 7305 12 19 to 7305 12 29 and the entries relating thereto, the following
shall be substituted, namely:—
“7305 12 19
---- Other
kg.
15%
-
--- Non-galvanised pipes, of iron :
7305 12 31
---- Clad, plated or coated
kg.
15%
-
7305 12 39
---- Other
kg.
15%
-
--- Non-galvanised pipes, other :
7305 12 41
---- Clad, plated or coated
kg.
15%
-
7305 12 49
---- Other
kg.
15%
-”;
(c) for tariff items 7305 19 19 to 7305 19 29 and the entries relating thereto, the following
shall be substituted, namely:—
“7305 19 19
---- Other
kg.
15%
-
--- Non-galvanised pipes, of iron :
7305 19 31
---- Clad, plated or coated
kg.
15%
-
7305 19 39
---- Other
kg.
15%
-
--- Non-galvanised pipes, other :
7305 19 41
---- Clad, plated or coated
kg.
15%
-
7305 19 49
---- Other
kg.
15%
-”;
155
(d) for tariff items 7305 31 10 to 7305 31 90 and the entries relating thereto, the following
shall be substituted, namely:—
“--- Galvanised :
7305 31 11
---- Of iron
kg.
15%
-
7305 31 19
---- Other
kg.
15%
-
--- Non-galvanised, of iron :
7305 31 21
---- Clad, plated or coated
kg.
15%
-
7305 31 29
---- Other
kg.
15%
-
--- Non-galvanised, other :
7305 31 31
---- Clad, plated or coated
kg.
15%
-
7305 31 39
---- Other
kg.
15%
-”;
(e) for tariff items 7305 39 10 to 7305 39 90 and the entries relating thereto, the following
shall be substituted, namely:—
“--- Galvanised :
7305 39 11
---- Of iron
kg.
15%
-
7305 39 19
---- Other
kg.
15%
-
--- Non-galvanised, of iron :
7305 39 21
---- Clad, plated or coated
kg.
15%
-
7305 39 29
---- Other
kg.
15%
-
--- Non-galvanised, other :
7305 39 31
---- Clad, plated or coated
kg.
15%
-
7305 39 39
---- Other
kg.
15%
-”;
(ii) in heading 7306, for tariff items 7306 19 19 to 7306 19 29 and the entries relating thereto, the
following shall be substituted, namely:—
“7306 19 19
---- Other
kg.
15%
-
--- Non-galvanised pipes, of iron :
7306 19 31
---- Clad, plated or coated
kg.
15%
-
7306 19 39
---- Other
kg.
15%
-
156
--- Non-galvanised pipes, other :
7306 19 41
---- Clad, plated or coated
kg.
15%
-
7306 19 49
---- Other
kg.
15%
-”;
(18) in Chapter 81, in heading 8101, after tariff item 8101 99 10 and the entries relating thereto, the following
shall be inserted, namely:—
“8101 99 20
--- Bars and rods, other than those obtained simply
by sintering, profiles, plates, sheets, strip and
foil
kg.
5%
-”;
(19) in Chapter 84,––
(i) in heading 8415, for tariff item 8415 90 00 and the entries relating thereto, the following
shall be substituted, namely:—
“8415 90
- Parts :
8415 90 10
--- Separately presented indoor units or outdoor
units for split-system air conditioning machines
u
20%
-
8415 90 90
--- Other
kg.
10%
-”;
(ii) in heading 8421, for tariff item 8421 99 00 and the entries relating thereto, the following
shall be substituted, namely:—
“8421 99
-- Other :
8421 99 10
--- Reverse Osmosis (RO) membrane element
for household type filters
u
10%
-
8421 99 90
--- Other
u
7.5%
-”;
(20) in Chapter 85, —
(i) in heading 8507, for tariff item 8507 90 10 and the entries relating thereto, the following
shall be substituted, namely:—
“8507 90 10
--- Accumulator cases made of hard rubber
kg.
10%
-
8507 90 20
--- Battery separators
kg.
5%
-”;
157
(ii) in heading 8529,––
(a) after tariff item 8529 10 92 and the entries relating thereto, the following shall be
inserted, namely:—
“8529 10 93
----
Other, for apparatus of headings 8525 to
8527
u
10%
-”;
(b) after tariff item 8529 90 20 and the entries relating thereto, the following shall be
inserted, namely:—
“8529 90 30
---
Other, for apparatus of headings 8525 to
8527
u
10%
-”;
(21) in Chapter 86, in heading 8609, for tariff item 8609 00 00 and the entries relating thereto, the following
shall be substituted, namely:—
“8609
CONTAINERS (INCLUDING
CONTAINERS FOR THE TRANSPORT
OF FLUIDS) SPECIALLY DESIGNED
AND EQUIPPED FOR CARRIAGE BY
ONE OR MORE MODES OF
TRANSPORT
8609 00
- Containers (including containers for the
transport of fluids) specially designed and
equipped for carriage by one or more modes
of transport :
8609 00 10
--- Refrigerated containers
u
5%
-
8609 00 90
--- Other
u
10%
-”.
158
THE FIFTH SCHEDULE
[See section 136(c)(ii)]
In the First Schedule to the Customs Tariff Act,––
(1) in Chapter 2, for the entry in column (4) occurring against tariff
items 0207 25 00 and 0207 27 00, the entry “5%” shall be substituted;
(2) in Chapter 3, for the entry in column (4) occurring against tariff
item 0306 36 60, the entry “Free” shall be substituted;
(3) in Chapter 5, for the entry in column (4) occurring against tariff
item 0511 91 40, the entry “Free” shall be substituted;
(4) in Chapter 8,––
(i) for the entry in column (4) occurring against tariff item
0802 11 00, the entry “Rs. 35 per kg.” shall be substituted;
(ii) for the entry in column (4) occurring against tariff item
0802 12 00, the entry “Rs. 100 per kg.” shall be substituted;
(iii) for the entry in column (4) occurring against tariff item
0802 31 00, the entry “100%” shall be substituted;
(5) in Chapter 12, for the entry in column (4) occurring against
tariff items 1209 10 00, 1209 21 00, 1209 22 00, 1209 23 00, 1209 24
00, 1209 25 00, 1209 29 10, 1209 29 90 and 1209 30 00, the entry
“15%” shall be substituted;
(6) in Chapter 15, for the entry in column (4) occurring against all
the tariff items of heading 1505, the entry “15%” shall be substituted;
(7) in Chapter 20, for the entry in column (4) occurring against
tariff items 2008 19 21, 2008 19 22, 2008 19 29, 2008 19 91 and 2008
19 92, the entry “30%” shall be substituted;
(8) in Chapter 21, for the entry in column (4) occurring against
tariff items 2106 90 11, 2106 90 19, 2106 90 20, 2106 90 30, 2106 90
40, 2106 90 60, 2106 90 70, 2106 90 80, 2106 90 91, 2106 90 92 and
2106 90 99, the entry “50%” shall be substituted;
(9) in Chapter 23, for the entry in column (4) occurring against
tariff item 2309 90 31, the entry “5%” shall be substituted;
(10) in Chapter 25,––
159
(i) for the entry in column (4) occurring against all the tariff
items of heading 2504, the entry “2.5%” shall be substituted;
(ii) for the entry in column (4) occurring against all the tariff
items of heading 2505, the entry “Free” shall be substituted;
(iii) for the entry in column (4) occurring against all the tariff
items of heading 2506, the entry “2.5%” shall be substituted;
(iv) for the entry in column (4) occurring against tariff item
2530 90 91, the entry “Free” shall be substituted;
(11) in Chapter 27,––
(i) for the entry in column (4) occurring against all the tariff
items of heading 2701, the entry “2.5%” shall be substituted;
(ii) for the entry in column (4) occurring against all the tariff
items of heading 2702, the entry “2.5%” shall be substituted;
(iii) for the entry in column (4) occurring against all the tariff
items of heading 2703, the entry “2.5%” shall be substituted;
(iv) for the entry in column (4) occurring against tariff item
2709 00 10, the entry “Re 1 per tonne” shall be substituted;
(12) in Chapter 28,––
(i) for the entry in column (4) occurring against tariff item
2804 50 20, the entry “Free” shall be substituted;
(ii) for the entry in column (4) occurring against tariff item
2804 61 00, the entry “Free” shall be substituted;
(iii) for the entry in column (4) occurring against tariff item
2804 69 00, the entry “Free” shall be substituted;
(iv) for the entry in column (4) occurring against tariff item
2804 90 00, the entry “Free” shall be substituted;
(v) for the entry in column (4) occurring against tariff item
2805 30 00, the entry “Free” shall be substituted;
(vi) for the entry in column (4) occurring against tariff item
2809 20 10, the entry “5%” shall be substituted;
(vii) for the entry in column (4) occurring against tariff item
2811 22 00, the entry “2.5%” shall be substituted;
160
(viii) for the entry in column (4) occurring against tariff item
2816 40 00, the entry “Free” shall be substituted;
(ix) for the entry in column (4) occurring against all the tariff
items of heading 2822, the entry “Free” shall be substituted;
(x) for the entry in column (4) occurring against tariff item
2825 20 00, the entry “Free” shall be substituted;
(xi) for the entry in column (4) occurring against all the tariff
items of sub-heading 2825 30, the entry “Free” shall be substituted;
(xii) for the entry in column (4) occurring against tariff item
2825 60 10, the entry “Free” shall be substituted;
(xiii) for the entry in column (4) occurring against all the
tariff items of sub-heading 2825 70, the entry “Free” shall be
substituted;
(xiv) for the entry in column (4) occurring against tariff item
2825 80 00, the entry “Free” shall be substituted;
(xv) for the entry in column (4) occurring against tariff item
2825 90 20, the entry “Free” shall be substituted;
(xvi) for the entry in column (4) occurring against tariff item
2827 35 00, the entry “Free” shall be substituted;
(xvii) for the entry in column (4) occurring against tariff item
2827 39 30, the entry “Free” shall be substituted;
(xviii) for the entry in column (4) occurring against tariff
item 2833 24 00, the entry “Free” shall be substituted;
(xix) for the entry in column (4) occurring against tariff item
2834 21 00, the entry “Free” shall be substituted;
(xx) for the entry in column (4) occurring against tariff item
2836 91 00, the entry “Free” shall be substituted;
(xxi) for the entry in column (4) occurring against tariff item
2836 92 00, the entry “Free” shall be substituted;
(13) in Chapter 29,––
(i) for the entry in column (4) occurring against tariff item
2910 20 00, the entry “2.5%”, shall be substituted;
(ii) for the entry in column (4) occurring against tariff item
2918 15 30, the entry “Free” shall be substituted;
(14) in Chapter 31, for the entry in column (4) occurring against
tariff item 3102 30 00, the entry “5%” shall be substituted;
(15) in Chapter 38,––
161
(i) for the entry in column (4) occurring against all the tariff
items of heading 3801, the entry “2.5%” shall be substituted;
(ii) for the entry in column (4) occurring against tariff item
3808 93 30, the entry “5%” shall be substituted;
(16) in Chapter 39, for the entry in column (4) occurring against
all the tariff items of heading 3904, the entry “7.5%” shall be
substituted;
(17) in Chapter 48, for the entry in column (4) occurring against
tariff item 4823 90 90, the entry “10%” shall be substituted;
(18) in Chapter 49, for the entry in column (4) occurring against
tariff item 4906 00 00, the entry “Free” shall be substituted;
(19) in Chapter 52, for the entry in column (4) occurring against
tariff item 5201 00 25, the entry “Free” shall be substituted;
(20) in Chapter 72, for the entry in column (4) occurring against
tariff item 7202 60 00, the entry “Free” shall be substituted;
(21) in Chapter 74, for the entry in column (4) occurring against
tariff item 7402 00 10, the entry “Free” shall be substituted;
(22) in Chapter 78, for the entry in column (4) occurring against
all the tariff items of heading 7802, the entry “Free” shall be
substituted;
(23) in Chapter 79, for the entry in column (4) occurring against
all the tariff items of heading 7902, the entry “Free” shall be
substituted;
(24) in Chapter 81, for the entry in column (4) occurring against
tariff item 8105 20 30, the entry “Free” shall be substituted;
(25) in Chapter 84, for the entry in column (4) occurring against
tariff items 8419 89 12, 8419 89 13, 8419 89 14, 8419 89 15, 8419 89
16, 8419 89 17 and 8419 89 19, the entry “7.5%” shall be substituted.
162
THE SIXTH SCHEDULE
(See section 142)
In the Seventh Schedule to the Finance Act, 2001,––
(i) for the entry in column (4) occurring against tariff item
2403 99 10, the entry “60%” shall be substituted;
(ii) for the entry in column (4) occurring against tariff item
2403 99 30, the entry “60%” shall be substituted;
(iii) for the entry in column (4) occurring against tariff item
2403 99 90, the entry “60%” shall be substituted.
163
STATEMENT OF OBJECTS AND REASONS
The object of the Bill is to give effect to the financial proposals of the Central Government
for the financial year 2026-2027. The notes on clauses explain the various provisions contained
in the Bill.
NIRMALA SITHARAMAN.
NEW DELHI;
The 31st January, 2026.
_________________
PRESIDENT’S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THE
CONSTITUTION OF INDIA
[Copy of letter No. 2(13)-B(D)2026, dated the 31st January, 2026 from Smt. Nirmala
Sitharaman, Minister of Finance, to the Secretary-General, Lok Sabha].
The President, having been informed of the subject matter of the proposed Bill,
recommends under clauses (1) and (3) of article 117, read with clause (1) of article 274, of the
Constitution of India, the introduction of the Finance Bill, 2026 to the Lok Sabha and also
recommends to the Lok Sabha the consideration of the Bill.
2.
The Bill will be introduced in the Lok Sabha immediately after the presentation of the
Budget on the 1st February, 2026.
164
Notes on Clauses
Clause 2 read with the First Schedule to the Bill seeks to specify the rates at which
income-tax is to be levied on income chargeable to tax for the assessment year 2026-2027
under the Income-tax Act, 1961.
Clause 3 read with the First Schedule to the Bill seeks to specify the rates at which
income-tax is to be levied on income chargeable to tax for the tax year 2026-2027 under the
Income-tax Act, 2025. Further, it lays down the rates at which tax is to be deducted at source
during the financial year under the Income-tax Act, 2025; and the rates at which “advance
tax” is to be paid, tax is to be deducted at source from, or paid on, income chargeable under
the head “Salaries” or deducted under section 393(1) [Table: Sl. No. 8(iii)] of the Income-
tax Act, 2025 and tax is to be calculated and charged in special cases for the financial year
2026-2027.
A.–– Income-tax under the Income-tax Act, 1961
Clause 4 of the Bill seeks to amend section 92CA of the Income-tax Act, 1961 relating
to reference to Transfer Pricing Officer.
The said section provides that where an assessee, has entered into an international
transaction or specified domestic transaction in any previous year, the Assessing Officer may
refer to the Transfer Pricing Officer for the computation of the arm's length price under
section 92C in relation to the said international transaction or specified domestic transaction.
Sub-section (3A) of the said Act provides that the Transfer Pricing Officer is required to
pass an order before sixty days prior to the date on which period of limitation specified in
section 153, or as the case may be, in section 153B for making the order of assessment or
reassessment or recomputation or fresh assessment, as the case may be, expires.
In this regard, it is proposed to insert sub-section (3AA) so as to provide that for the
purpose of making order under sub-section (3), the calculation of sixty days shall be made
and shall be deemed to have been made in the following manner, namely:––
(a) where the period of limitation expires on 31st of March of any year (not being a
leap year), the order under sub-section (3) may be made up to the 30th of January of that
year;
(b) where the period of limitation expires on 31st of March of any year (being a leap
year), the order under sub-section (3) may be made up to the 31st of January of that year;
(c) where the period of limitation expires on 31st of December of any year, the order
under sub-section (3) may be made up to the 1st of November of that year.
165
This amendment will take effect retrospectively from 1st June, 2007.
Clause 5 of the Bill seeks to amend section 139 of the Income-tax Act, 1961 relating to
return of income.
Explanation 2 to sub-section (1) of said section provides definition for “due date” to
mean the last date for filing the return by different classes of assessee or person for the
assessment year, with different conditions applied therein.
It is proposed to substitute the said Explanation so as to provide that for the purposes
of this sub-section “due date” means in respect of the persons mentioned in column B of the
Table below, subject to the conditions as mentioned in column C of the said Table, shall be
the due date of assessment year as mentioned in column D thereof:
TABLE
Sl.
No.
Person
Conditions
Due date
A
B
C
D
1.
Assessee, including the partners
of the firm or the spouse of such
partner (if section 5A applies to
such spouse).
Where
the
provisions
of
section
92E
apply.
30th
November.
2.
(i) Company;
(ii) Assessee (other than a
company) whose accounts are
required to be audited under this
Act or under any other law for
the time being in force;
(iii) partner of a firm whose
accounts are required to be
audited under this Act or under
any other law in force or the
spouse of such partner (if
section 5A applies to such
spouse).
Where
the
provisions
of
section 92E do
not apply.
31st
October.
3.
(i) Assessee having income
from profits and gains of
business or profession whose
accounts are not required to be
audited under this Act or under
Where
the
provisions
of
section 92E do
not apply.
31st
August.
166
any other law for the time being
in force;
(ii) partner of a firm whose
accounts are not required to be
audited under this Act or under
any other law in force or the
spouse of such partner (if
section 5A applies to such
spouse).
4.
Any other assessee.
31st July.
Sub-section (5) of the said section of the said Act deal with the revised return
of income. It allows a person who has already furnished a return under sub-sections (1) and
(4) of the said section to file a revised return, if any omission or wrong statement is
discovered in the original or belated return. Such revised return must be furnished at any
time before three months prior to the end of relevant assessment year or before completion
of assessment, whichever is earlier.
It is further proposed to substitute said sub-section to provide that if any person, having
furnished a return under sub-section (1) or sub-section (4), discovers any omission or any
wrong statement therein, he may, subject to the provisions of section 234-I, furnish a revised
return at any time before the end of the relevant assessment year or before the completion of
the assessment, whichever is earlier.
Sub-section (8A) of the said section provides for updated return of Income. It allows
a taxpayer, whether or not a return was furnished earlier, to file an updated return within
forty-eight months from the end of the financial year succeeding the relevant tax year. This
provision is meant to promote voluntary compliance on the part of taxpayer to offer the
income for taxation.
It is proposed to provide for filing updated return for reducing the loss in specified
circumstances. Also, an updated return may be furnished by a person for the relevant
assessment year in pursuance of a notice under section 148 within such period as specified
in the said notice and in such a case, the assessee shall be precluded from filing return in
pursuance of the said notice in any other manner.
These amendments will take effect retrospectively from 1st March, 2026.
Clause 6 of the Bill seeks to amend section 140B of the Income-tax Act, 1961 relating to
tax on updated return.
Sub-section (3) of the said section provides that additional income-tax amounting to
twenty-five per cent., fifty per cent., sixty per cent., seventy per cent. of the aggregate of tax
and interest payable, shall be paid along with original tax and interest payable, for filing the
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updated return in first, second, third and fourth year, respectively from the end of the relevant
assessment year.
It is proposed to insert sub-section (3A) in the said section so as to provide that where
an updated return is filed in pursuance of a notice issued under section 148 within the period
specified in the said notice, the additional income-tax payable shall be increased by a further
sum of ten per cent. of the aggregate of tax and interest payable on account of furnishing the
updated return.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 7 of the Bill seeks to amend section 144C of the Income-tax Act, 1961 relating to
reference to Dispute Resolution Panel.
Section 144C of the said Act, inter alia, provides for the procedure and scheme for
making a reference to the Dispute Resolution Panel in respect of certain eligible assessee.
Section 153 of the said Act provides for the time limits for completion of assessment,
reassessment, and recomputation proceedings and sets the time limit for concluding such
proceedings.
The Dispute Resolution Panel mechanism, as provided under section 144C of the said
Act provides for a specific procedure as below:––
(i) filing of objections before the Dispute Resolution Panel — within thirty days
from the date of receipt of the draft assessment order;
(ii) issuance of directions by the Dispute Resolution Panel — within nine months
from the end of the month in which the draft assessment order is forwarded to the eligible
assessee; and
(iii) passing of the final assessment order — notwithstanding anything contained in
sections 153 or 153B of the said Act, within one month from the end of the month in
which the directions of the Dispute Resolution Panel are received, as mandated under
sub-section (13).
In cases where the assessee accepts the draft assessment order and does not file objections
before the Dispute Resolution Panel, the Assessing Officer is required, notwithstanding
anything contained in sections 153 or 153B of the said Act, as the case may be, to pass the
final assessment order within one month from the end of the month in which the period
specified for filing objections expires, in terms of sub-section (4) of section 144C of the said
Act.
It is proposed to amend section 144C of the said Act so as to clarify the time-limits
available to the Assessing Officer to pass the final assessment order upon receipt of direction
issued by Dispute Resolution Panel. Therefore it is hereby clarified for the purposes of sub-
section (4) that where a draft of the proposed order of assessment under sub-section (1) is
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forwarded within the time period allowed under section 153/153B, further time period
available to the Assessing Officer to complete the assessment under sub-section (3) shall be
governed and shall always be deemed to have been governed by the provisions of sub-section
(4).
Further, it is also clarified for the purposes of sub-section (13) that where a draft of the
proposed order of assessment under sub-section (1) is forwarded within the time period
allowed under section 153/153B, time period available for the Assessing Officer under sub-
section (13) to pass the assessment order upon receipt of the direction issued under sub-
section (5), shall be governed and shall always be deemed to have been governed by the
provisions of sub-sections (12) and (13).
It is proposed to insert sub-section (4A), (4B), (13A) and (13B) in section 144C of
the said Act so as to clarify the time period available to the Assessing Officer to complete
the assessment under sub-section (3) and sub-section (13), as the case may be, of section
144C of the said Act.
These amendments will take effect retrospectively from 1st April, 2009 for sub-section
(4A) and (13A) of section 144C of the said Act.
These amendments will take effect retrospectively from 1st October, 2009 for sub-section
(4B) and (13B) of section 144C of the said Act.
Clause 8 of the Bill seeks to insert a new section 147A of the Income-tax Act, 1961
relating to Assessing Officer for the purposes of section 148 and 148A.
Vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020, sections 144B and 151A were inserted in the said Act. Section 144B provides for
statutory procedure for faceless assessments with effect from the 1st day of April, 2021.
Section 147 of the Income-tax Act, 1961 empowers the Assessing Officer to assess,
reassess, or recompute income if any income chargeable to tax has escaped assessment for a
particular assessment year. Section 148 of the said Act provides that the Assessing Officer
is mandated to issue a notice to the assessee so as to furnish a return of income where income
chargeable to tax has escaped assessment.
The Finance Act, 2021 had inserted section 148A into the said Act with effect from 1st
day of April, 2021 to introduce a mandatory pre-notice inquiry process and opportunity of
hearing before issuance of a notice under section 148. The said section requires the Assessing
Officer to conduct an inquiry, if required, with prior approval of the specified authority,
provide the assessee with a show cause notice along with information suggesting escapement
of income, and grant an opportunity of being heard. After considering the assessee’s reply,
the Assessing Officer is required to pass a reasoned order under sub-section (3) of section
148A, as the case may be, determining whether it is a fit case for issuance of notice under
section 148. The said order under sub-section (3) of section 148A is issued with the prior
approval of the specified authority.
169
It is proposed to insert section 147A after the said section 147 of the Income-tax Act,
1961 so as to remove doubts and to clarify that the Assessing Officer for the purposes of
sections 148 and 148A shall mean and shall always be deemed to have meant to be an
Assessing Officer other than the National Faceless Assessment Centre or any assessment
unit referred to in sub-section (3) of section 144B.
This amendment will take effect retrospectively from 1st April, 2021.
Clause 9 of the Bill seeks to amend section 153 of the Income-tax Act, 1961 relating to
the time limit for completion of assessment, reassessment and recomputation.
Section 153 of the said Act provides for the time limits for completion of assessment,
reassessment, and recomputation proceedings and sets the time limit for concluding such
proceedings.
It is proposed to amend section 153 of the said Act by inserting sub-section (10) so as to
clarify that in terms of provisions of sub-sections (1) to (4) of the said section, the draft of
the proposed order of assessment referred to in sub-section (1) of section 144C shall be made,
and shall always be deemed to have been made, at any time up to the time limit of assessment,
reassessment or recomputation referred in the said sub-sections.
This amendment will take effect retrospectively from 1st April, 2009.
Clause 10 of the Bill seeks to amend section 153B of the Income-tax Act, 1961 relating
to the time limit for completion of assessment, under section 153A .
Section 153B of the said Act provides for the time limits for completion of assessment
and reassessment proceedings related to search initiated under section 132 and requisition
made under section 132A and sets the time limit for concluding such proceedings.
It is proposed to amend section 153B of the said Act by inserting sub-section (1A) so as
to clarify that in terms of provisions of this section, the draft of the proposed order of
assessment referred to in sub-section (1) of section 144C shall be made, and shall always be
deemed to have been made, at any time up to the time limit of assessment, reassessment or
recomputation referred in this section.
This amendment will take effect retrospectively from 1st October, 2009.
Clause 11 of the Bill seeks to amend section 220 of the Income-tax Act, 1961 relating to
when tax payable and when assessee deemed in default.
The said section provides the payment and recovery of tax demand, stating that any
amount specified in a notice of demand under section 156 must be paid within thirty days of
service of the notice. If the assessee fails to pay within this period, they are deemed to be in
170
default and become liable to interest under sub-section (2) of section 220, along with possible
recovery proceedings such as attachment of property. The Assessing Officer may, however,
allow payment by instalments or extend the time for payment, subject to conditions, to
provide relief in genuine cases.
In section 274, it is proposed to provide that, penalty for under-reporting of income under
leviable under section 270A shall be imposed in the assessment order.
It is proposed to make consequential amendment in sub-section (2) of section 220 for
charging of interest under the said sub-section in respect of any demand raised on account of
penalty levied under section 270A only after passing of the order by the Commissioner of
Income-tax (Appeals) or the Income-tax Appellate Tribunal (for appeal against the order
passed in pursuance of directions issued by the Dispute Resolution Panel order), as the case
may be.
This amendment will take effect retrospectively from the 1st March, 2026.
Clause 12 of the Bill seeks to insert section 234-I after section 234H of the Income-tax
Act, 1961, relating to fee for default in furnishing revised return of income.
It is proposed to levy of fee amounting to five thousand rupees for revising the return
after nine months from the end of relevant previous year where the total income is more than
five lakh rupees, and a fee of one thousand rupees for revising the return after nine months
from the end of relevant previous year where the total income is less than five lakh rupees.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 13 of the Bill seeks to amend section 245MA of the Income-tax Act, 1961 relating
to Dispute Resolution Committee.
The said section provides for the constitution of a Dispute Resolution Committee to
resolve disputes of specified small and medium taxpayers in a cost-effective and expeditious
manner. The said Committee is empowered to reduce or waive penalties and grant immunity
from prosecution, subject to conditions, with the objective of reducing litigation. The section
lays down eligibility, procedure, and binding nature of the Dispute Resolution Committee
order, promoting voluntary compliance and speedy dispute resolution.
It is proposed to amend the said section so as to provide that penalty for under-reporting
of income leviable under section 270A imposed in the assessment order may be waived by
the Dispute Resolution Committee.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 14 of the Bill seeks to amend section 270A of the Income-tax Act, 1961 relating
to penalty for under reporting and misreporting of income.
171
It is proposed to insert a new sub-section (11A) in the said section so as to provide that
where additional income-tax is paid in accordance with sub-section (3A) of section 140B,
the income on which such additional income-tax is paid shall not form the basis of imposition
of penalty.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 15 of the Bill seeks to amend section 270AA of the Income-tax Act, 1961
relating to immunity from imposition of penalty, etc.
The said section, inter alia, provides the procedure for granting immunity by the
Assessing Officer from imposition of penalty or initiation of prosecution, if assessee fulfils
certain conditions, specified therein.
Under the said section immunity is granted only in the cases of under-reporting of
income and not in the case of under-reporting of income in consequence of misreporting.
It is proposed to amend the said section so as to extend such immunity to cases where
penalty is initiated for under-reporting of income in consequence of misreporting, on
payment of the tax and interest payable as per the order of assessment under sub-section (3)
of section 143 or reassessment under section 147, along with additional income-tax
amounting to one hundred per cent. of the aggregate of such tax payable.
This amendment will take effect retrospectively from 1st day of March, 2026.
Clause 16 of the Bill seeks to amend section 274 of the Income-tax Act, 1961 relating to
procedure.
The said section prescribes the procedure for imposing penalties and mandates that
no penalty shall be levied unless the assessee is given a reasonable opportunity of being
heard. It requires the Assessing Officer to issue a show-cause notice for which the penalty is
proposed, and in certain cases, prior approval of higher authorities is necessary before
imposing the penalty. The section ensures adherence to the principles of natural justice and
aims to prevent arbitrary or invalid penalty proceedings.
It is proposed to amend the said section so as to provide that penalty for under-
reporting of income leviable under section 270A shall be imposed in the assessment order
made on or after the 1st April, 2027 for assessment year 2026-2027 or any earlier assessment
year.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 17 of the Bill seeks to amend section 275A of the Income-tax Act, 1961
(hereinafter referred as the ‘Act’) relating to contravention of order made under sub-section
(3) of section 132.
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The said section provides that whoever contravenes any order referred to in the second
proviso to sub-section (1) or sub-section (3) of section 132 shall be punishable with rigorous
imprisonment which may extend to two years and shall also be liable to fine.
It is proposed to amend the said section so as to change the nature of punishment from
“imprisonment which may extend to two years and shall also be liable to fine” to “simple
imprisonment for term which may extend to two years and with fine”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 18 of the Bill seeks to amend section 275B of the Income-tax Act, 1961 relating
to failure to comply with the provisions of clause (iib) of sub-section (1) of section 132.
The said section provides that if a person who is required to afford the authorised officer
the necessary facility to inspect the books of account or other documents, as required under
clause (iib) of sub-section (1) of section 132, fails to afford such facility to the authorised
officer, he shall be punishable with rigorous imprisonment for a term which may extend to
two years and shall also be liable to fine.
It is proposed to amend the said section so as to change the punishment from “rigorous
imprisonment for a term which may extend to two years and shall also be liable to fine” to
“simple imprisonment for a term which may extend to six months or with fine or with both”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 19 of the Bill seeks to amend section 276 of the Income-tax Act, 1961 relating
to removal, concealment, transfer or delivery of property to thwart tax recovery.
The said section provides that whoever fraudulently removes, conceals, transfers or
delivers to any person, any property or any interest therein, intending thereby to prevent that
property or interest therein from being taken in execution of a certificate under the provisions
of the Second Schedule shall be punishable with rigorous imprisonment for a term which
may extend to two years and shall also be liable to fine.
It is proposed to amend the said section so as to change the punishment from “rigorous
imprisonment for a term which may extend to two years and shall also be liable to fine” to
“simple imprisonment for a term which may extend to two years and with fine”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 20 of the Bill seeks to substitute sections 276B, 276BB, 276C, 276CC, 276CCC
and 276D of the Income-tax Act, 1961 relating to failure to pay tax to the credit of Central
Government under Chapter XII-D or XVII-B, failure to pay the tax collected at source, wilful
attempt to evade tax, etc., failure to furnish returns of income, failure to furnish return of
income in search cases and failure to produce accounts and documents, respectively with
new sections.
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The offences under section 276B are proposed to be fully decriminalized, as below:
(i) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where amount of such tax exceeds fifty lakh rupees;
(ii) with simple imprisonment for a term which may extend to six months, or with fine,
or with both, in a case where amount of such tax exceeds ten lakh rupees but does not exceed
fifty lakh rupees;
(iii) with fine, in any other case.
Section 276BB provides that if a person fails to pay to the credit of the Central
Government, the tax collected by him as required under the provisions of section 206C, he
shall be punishable with rigorous imprisonment for a term which shall not be less than three
months but which may extend to seven years and with fine.
In this regard, it is proposed to amend section 276BB of the Act as below:
(i) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where amount of such tax exceeds fifty lakh rupees;
(ii) with simple imprisonment for a term which may extend to six months or with fine,
or with both, in a case where amount of such tax exceeds ten lakh rupees but does not exceed
fifty lakh rupees;
(iii) with fine, in any other case.
Section 276C(1) provides that if a person wilfully attempts in any manner whatsoever
to evade any tax, penalty or interest chargeable or imposable, or under reports his income,
under this Act, he shall, without prejudice to any penalty that may be imposable on him under
any other provision of this Act, be punishable,— (i) in a case where the amount sought to be
evaded or tax on under-reported income exceeds twenty-five hundred thousand rupees, with
rigorous imprisonment for a term which shall not be less than six months but which may
extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a
term which shall not be less than three months but which may extend to two years and with
fine. Further, section 276C(2) states that if a person wilfully attempts in any manner
whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall,
without prejudice to any penalty that may be imposable on him under any other provision of
this Act, be punishable with rigorous imprisonment for a term which shall not be less than
three months but which may extend to two years and shall, in the discretion of the court, also
be liable to fine.
It is proposed to amend section 276C as below:
174
(a) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where the amount sought to be evaded or tax on under-reported income
exceeds fifty lakh rupees;
(b) with simple imprisonment for a term which may extend to six months, or with fine,
or with both, in a case where the amount sought to be evaded or tax on under-reported income
exceeds ten lakh rupees but does not exceed fifty lakh rupees;
(c) with fine, in any other case.
Further, punishment of offences under section 276C(2) is proposed to be changed
as below:
(a) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where the amount sought to be evaded exceeds fifty lakh rupees;
(b) with simple imprisonment for a term which may extend to six months, or with fine,
or with both, in a case where the amount sought to be evaded exceeds ten lakh rupees but
does not exceed fifty lakh rupees;
(c) with fine, in any other case.
Section 276CC provides that if a person wilfully fails to furnish in due time the return
of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or
by notice given under sub-section (2) of the said section or section 115WH or the return of
income which he is required to furnish under sub-section (1) of section 139 or by notice
given under clause (i) of sub-section (1) of section 142 or section 148 or section 153A, he
shall be punishable,— (i) in a case where the amount of tax, which would have been evaded
if the failure had not been discovered, exceeds twenty-five hundred thousand rupees, with
rigorous imprisonment for a term which shall not be less than six months but which may
extend to seven years and with fine; (ii) in any other case, with imprisonment for a term
which shall not be less than three months but which may extend to two years and with fine
It is proposed to amend section 276CC of the Act so as to change the punishment
as below:
(a) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where the amount of tax, which would have been evaded if the failure
had not been discovered, exceeds fifty lakh rupees;
(b) with simple imprisonment for a term which may extend to six months, or with fine,
or with both, in a case where the amount of tax, which would have been evaded if the failure
had not been discovered, exceeds ten lakh rupees but does not exceed fifty lakh rupees;
(c) with fine, in any other case.
175
Section 276CCC provides that if a person wilfully fails to furnish in due time the
return of total income which he is required to furnish by notice given under clause (a) of sub-
section (1) of section 158BC, he shall be punishable with imprisonment for a term which
shall not be less than three months but which may extend to three years and with fine.
It is proposed to amend section 276CCC so as to change the punishment as below:
(a) with simple imprisonment for a term which may extend to two years, or with fine,
or with both, in a case where the amount of tax exceeds fifty lakh rupees;
(b) with simple imprisonment which may extend to six months, or with fine, or with
both, in a case where the amount of tax, exceeds ten lakh rupees but does not exceed fifty
lakh rupees;
(c) with fine, in any other case.
Section 276D provides that if a person wilfully fails to produce, or cause to be
produced, on or before the date specified in any notice served on him under sub-section (1)
of section 142, such accounts and documents as are referred to in the notice or wilfully fails
to comply with a direction issued to him under sub-section (2A) of that section, he shall be
punishable with rigorous imprisonment for a term which may extend to one year and with
fine.
It is proposed to amend section 276D of the Act so as to change the punishment as
below:
(a) in the case where a person wilfully fails to produce, or cause to be produced, on or
before the date specified in any notice served on him under sub-section (1) of section 142,
such accounts and documents as are referred to in the notice. This offence is proposed to be
decriminalised.
(b) in the case where a person wilfully fails to comply with a direction issued to him
under sub-section (2A) of section 142, he shall be punishable with rigorous imprisonment
for a term which may extend to one year and with fine. This punishment is proposed to be
changed to “simple imprisonment for a term which may extend to six months or with fine”.
These amendments will take effect retrospectively from 1st March, 2026.
Clause 21 of the Bill seeks to amend section 277 of the Income-tax Act, 1961 relating to
false statement in verification, etc.
The said section provides that if a person makes a statement in any verification under this
Act or under any rule made thereunder, or delivers an account or statement which is false,
and which he either knows or believes to be false, or does not believe to be true, he shall be
punishable,— (i) in a case where the amount of tax, which would have been evaded if the
statement or account had been accepted as true, exceeds twenty-five hundred thousand
176
rupees, with rigorous imprisonment for a term which shall not be less than six months but
which may extend to seven years and with fine; (ii) in any other case, with rigorous
imprisonment for a term which shall not be less than three months but which may extend to
two years and with fine.
It is proposed to amend the said section so as to change the as below:
(a) with simple imprisonment for a term which may extend to two years, or with fine, or
with both, in a case where the amount of tax, which would have been evaded if the statement
or account had been accepted as true, exceeds fifty lakh rupees;
(b) with simple imprisonment for a term which may extend to six months, or with fine,
or with both, in a case where the amount of tax, which would have been evaded if the
statement or account had been accepted as true, exceeds ten lakh rupees but does not exceed
fifty lakh rupees;
(c) with fine, in any other case.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 22 of the Bill seeks to amend section 277A of the Income-tax Act, 1961 relating
to falsification of books of account or document, etc.
The said section, inter alia, provides that if any person wilfully and with intent to enable
any other person to evade any tax or interest or penalty chargeable and imposable under this
Act, makes or causes to be made any entry or statement which is false and which the first
person either knows to be false or does not believe to be true, in any books of account or
other document relevant to or useful in any proceedings against the first person or the second
person, under this Act, the first person shall be punishable with rigorous imprisonment for a
term which shall not be less than three months but which may extend to two years and with
fine.
It is proposed to amend the said section of the Act so as to change the punishment from
“rigorous imprisonment for a term which shall not be less than three months but which may
extend to two years and with fine” to “simple imprisonment for a term which may extend to
two years and shall also be liable to fine”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 23 of the Bill seeks to amend section 278 of the Income-tax Act, 1961 relating
to abetment of false return, etc.
The said section, inter alia, provides that if a person abets or induces in any manner
another person to make and deliver an account or a statement or declaration relating to any
income or any fringe benefits chargeable to tax which is false and which he either knows to
be false or does not believe to be true or to commit an offence under sub-section (1) of section
177
276C, he shall be punishable,— (i) in a case where the amount of tax, penalty or interest
which would have been evaded, if the declaration, account or statement had been accepted
as true, or which is wilfully attempted to be evaded, exceeds twenty-five hundred thousand
rupees, with rigorous imprisonment for a term which shall not be less than six months but
which may extend to seven years and with fine; (ii) in any other case, with rigorous
imprisonment for a term which shall not be less than three months but which may extend to
two years and with fine.
It is proposed to amend the said section so as to change the punishment as below:
(i) with simple imprisonment for a term which may extend to two years, or with
fine, or with both, in a case where the amount of tax, penalty or interest which would
have been evaded, if the declaration, account or statement had been accepted as true, or
which is wilfully attempted to be evaded, exceeds fifty lakh rupees;
(ii) with simple imprisonment for a term which may extend to six months, or with
fine, or with both, in a case where the amount of tax, penalty or interest which would
have been evaded, if the declaration, account or statement had been accepted as true, or
which is wilfully attempted to be evaded, exceeds ten lakh rupees but does not exceed
fifty lakh rupees;
(iii) with fine, in any other case.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 24 of the Bill seeks to amend section 278A of the Income-tax Act, 1961 relating
to punishment for second and subsequent offences.
The said section provides that if any person convicted of an offence under section 276B
or section 276BB or sub-section (1) of section 276C or section 276CC or section 276DD or
section 276E or section 277 or section 278 is again convicted of an offence under any of the
aforesaid provisions, he shall be punishable for the second and for every subsequent offence
with rigorous imprisonment for a term which shall not be less than six months but which
may extend to seven years and with fine.
It is proposed to amend the said section so as to change the from “rigorous imprisonment
for a term which shall not be less than six months but which may extend to seven years, and
with fine” to “simple imprisonment for a term which shall not be less than six months but
which may extend to three years and shall also be liable to fine”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 25 of the Bill seeks to amend section 280 of the Income-tax Act, 1961 relating to
disclosure of particulars by public servants.
178
The said section 280(1), inter alia, that if a public servant furnishes any information or
produces any document in contravention of the provisions of sub-section (2) of section 138,
he shall be punishable with imprisonment which may extend to six months, and shall also be
liable to fine.
It is proposed to amend the said section so as to change the punishment from
“imprisonment which may extend to six months, and shall also be liable to fine” to “simple
imprisonment which may extend to one month, or with fine, or with both”.
This amendment will take effect retrospectively from 1st March, 2026.
Clause 26 of the Bill seeks to insert a new section 292BA of the Income-tax Act, 1961
relating to return of income, etc., not to be invalid on certain grounds.
It is proposed to insert a new section 292BA so as to clarify that no assessment under
any of the provisions of the said Act shall be invalid or shall be deemed to have been invalid
on the ground of any mistake, defect or omission in respect of quoting of a computer
generated Document Identification Number, if the assessment order is referenced by such
number in any manner.
This amendment will take effect retrospectively from 1st October, 2019.
B.–– Income-tax under the Income-tax Act, 2025
Clause 27 of the Bill seeks to amend section 2 of the Income-tax Act, 2025 relating to
definitions of the expressions.
Clause (32) of the said section provides for the definition of the expression “co-operative
society”.
However, co-operative societies registered under the Multi-State Cooperative Societies
Act, 2002, are not explicitly recognised in the definition presently provided in the said clause.
It is proposed to amend the said clause so as to include the co-operative societies
registered under the Multi-State Co-operative Societies Act, 2002, within the scope of the
definition of the expression “co-operative society”.
Clause (40) of the said section, inter alia, provides the definition of the expression
“dividend”.
It is further proposed to omit sub-clause (f) of the said section so as to exclude
consideration received on buyback of shares from the scope of dividend.
Sub-clause (v) to the first long line of the said clause provides that dividend does not
include any advance or loan between two group entities, where,––
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(A) one of the group entities is a “Finance company” or a “Finance unit”; and
(B) the parent entity or principal entity of such group is listed on stock exchange in a
country or territory outside India other than the country or territory outside India as may
be specified by the Board in this behalf.
It is also proposed to substitute the said sub-clause, inter alia, so as to provide that the
other group entity to the transaction is located in a country or territory outside India, the
parent entity or the principal entity of such group is listed on stock exchange in a country or
territory outside India, and for such purposes the country or territory outside India shall be
specified by the Central Government, by notification in the Official Gazette.
It is also proposed to provide definition of the expressions “group entity”, “parent
entity” and “principal entity”.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 28 seeks to amend section 7 of the Income-tax Act, 2025 relating to income
deemed to be received and dividend deemed to be income in a tax year.
Clause (a) of sub-section (2) of the said section provides for the year of taxability of
dividend income by reference to the definition of dividend under section 2(40)(a) to (f). It is
proposed to amend clause (a) of the said sub-section so as to omit the reference of clause (f)
of section 2(40).
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 29 of the Bill seeks to amend section 21 of the Income-tax Act, 2025 relating to
determination of annual value.
Sub-section (5) of the said provides that where a property is held as stock-in-trade and is
not let wholly or partly at any time during the tax year, the annual value of such property or
part thereof shall be nil for two years from the end of the financial year in which the
certificate for completion of construction is obtained from the competent authority.
It is proposed to amend the said sub-section so as to change the annual value of property
or part thereof to be treated as nil “for two years” instead of “up to two years”.
This amendment will take effect from 1st April, 2026.
Clause 30 of the Bill seeks to amend section 22 of the Income-tax Act, 2025 relating to
deductions from income from house property.
180
The said section deals with deductions in the case of income from house property.
Further, sub-section (2) of the said section provides that the aggregate amount of deduction
in the case of self-occupied property shall not exceed ₹ 2 lakhs where property is acquired
or constructed with borrowed capital. However, this ceiling of ₹ 2 lakhs has not included the
deduction of prior-period interest payable for the acquisition or construction of property.
It is proposed to amend the said sub-section so as to provide that aggregate amount of
deduction for interest on borrowed capital shall be inclusive of prior-period interest payable.
This amendment will take effect from 1st April, 2026.
Clause 31 of the Bill seeks to amend section 29 of the Income-tax Act, 2025 relating to
deductions related to employee welfare.
Sub-clause (i) of clause (e) of sub-section (1) of the said section provides for deduction
of any amount of contribution received by the assesee being an employer from an employee
to which the provisions of section 2(49)(o) apply, if such amount is credited by the assessee
to the account of the employee in the relevant fund or funds by the due date.
Sub-clause (ii) of clause (e) of sub-section (1) of the said section provides that “due
date” means the date by which the assessee is required as an employer to credit employee
contribution to the account of an employee in the relevant fund under any Act, rule, order or
notification issued under it or under any standing order, award, contract of service or
otherwise.
It is proposed to substitute the said clause so as to provide that due date for the purposes
of the said section shall be on or before the due date of filing of return of income under
section 263(1) for the assessee.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 32 seeks to amend section 58 of the Income-tax Act, 2025 relating to special
provision for computing profits and gains of business or profession on presumptive basis in
case of certain residents.
It is proposed to amend this section omit the reference of section 144 and consequentially
to omit sub-clause (i) of clause (a) of sub-section (11) of the said section.
This amendment will take effect from 1st April, 2026.
Clause 33 of the Bill seeks to amend section 66 of the Income-tax Act, 2025 relating to
interpretation of certain expression in Part D of Chapter IV.
It is proposed to provide the definition of commodity derivative therein.
181
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 34 seeks to amend section 69 of the Income-tax Act, 2025 relating to capital
gains on purchase by company of its own shares or other specified securities.
It is proposed to substitute sub-section (2) so as to provide that in respect of capital
gains referred to in sub-section (1), where the shareholder or holder of other specified
securities is a promoter, the aggregate income-tax payable on such capital gains shall be,––
(a) the income-tax payable on such capital gains in accordance with the provisions
of the Act; and
(b) an additional income tax in respect of capital gains specified in column B of
the Table below, computed at the rate specified in column C or column D of the said
Table;
TABLE
Sl.
No
Income
Rate,
where
the
promoter is a
domestic
company
Rate,
where
the
promoter
is
other
than
a
domestic
company
A
B
C
D
1.
Short-term
capital
gains
referred to in section 196 arising
from the transfer of such securities.
2%
10%
2.
Long-term
capital
gains
referred to in section 197 or section
198 arising from the transfer of
such securities.
9.5%
17.5%
It is further proposed to substitute sub-section (3) so as to provide definitions to certain
expressions.
These amendments will take effect from the 1st April, 2026 and will, accordingly, apply
in relation to the tax year 2026-2027 and subsequent years.
Clause 35 of the Bill seeks to amend section 70 of the Income-tax Act, 2025 relating to
transactions not regarded as transfer.
It is proposed to substitute clause (x) of sub-section (1) of the said section so as to provide
that the exemption will be applicable only to those Sovereign Gold Bonds issued by the
182
Reserve Bank of India that are subscribed to by an individual at the time of original issue
and are held continuously by such individual until redemption upon maturity, and to provide
that this exemption shall apply uniformly to all Sovereign Gold Bonds issued by the Reserve
Bank of India.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 36 seeks to amend section 93 of the Income-tax Act, 2025 relating to deductions.
The said section provides for deduction of interest expenditure, subject to a specified
limit, while computing dividend income and income from units of mutual funds.
It is proposed to amend sub-section (1) and substitute sub-section (2) of the said section
so as to provide that no deduction shall be allowed in respect of any expenditure against
dividend income and income from units of mutual funds.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026–2027 and subsequent years.
Clause 37 of the Bill seeks to amend section 99 of the Income-tax Act, 2025 relating to
income of individual to include income of spouse, minor, child, etc.
It is proposed to make consequential amendment in the said section regarding cross
reference.
This amendment will take effect from 1st April, 2026.
Clause 38 of the Bill seeks to amend section 147 of the Income-tax Act 2025 relating to
deductions for income of Offshore Banking Units and Units of International Financial
Services Centre.
Sub-section (1) of the said section allows deduction to certain entities specified therein.
Sub-section (2) of the said section provides the time period for such deduction.
It is proposed to amend sub-section (2) of the said section so as to extend the tax holiday
for twenty consecutive years from ten years and twenty consecutive years out of twenty-five
years respectively to entities under clauses (a) and (b) of sub-section (1) of the said section.
It is further proposed to substitute sub-sections (5) so as to provide that the units referred
to in sub-section (1) shall be entitled to benefit if such unit is not formed by splitting up,
reconstruction, reorganisation or transfer a business.
It is also proposed to insert sub-section (6) to the said section so as to explain the
expression “relevant tax year”, and to define the expressions “Unit” and “aircraft and ship”.
183
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 39 of the Bill seeks to amend section 149 of the Income-tax Act, 2025 relating to
deduction in respect of income of co-operative societies.
Clause (b) of sub-section (2) of the said section, inter alia, provides for deduction of
whole of the amount of profits and gains of business in the case of a co-operative society,
being a primary society engaged in supplying milk, oilseeds, fruits, or vegetables raised or
grown by its members to certain entities.
It is proposed to include cotton seeds and cattle feed also within the ambit of the said
clause.
Clause (d) of sub-section (2) of the said section allows for deduction of income by way
of dividends received by the co-operative society from any other co-operative society in the
old tax regime.
It is further proposed to amend said clause so as to provide that the inter-cooperative
societies dividend shall also be allowed as a deduction under the new tax regime under
sections 203 and 204 of the Act, for the co-operative societies, to the extent such dividend is
distributed by the co-operative society to its members.
It is also proposed to insert a new sub-section (6) to define to certain expressions.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 40 of the Bill seeks to substitute section 150 of the Income-tax Act, 2025 relating
to interpretation for purposes of section 149.
The proposed section provides for deduction in respect of federal co-operative.
Sub-section (1) of the proposed section provides that the income by way of dividend by
federal co-operative from any company in respect of investments made on or before the 31st
January, 2026 is to be allowed as deduction in both the new and the old tax regime.
Sub-section (2) thereof provides that such deduction shall not apply to any tax year
beginning on or after the 1st April, 2029.
Sub-section (3) thereof provides for the definition of the expression “federal co-
operative”.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
184
Clause 41 seeks to amend section 162 of the Income-tax Act, 2025 relating to meaning
of associate of enterprise.
It is proposed to amend the said section to substitute clause (c) of sub-section (1) to
remove the reference of section 144.
This amendment will take effect from 1st April, 2026.
Clause 42 seeks to amend section 164 of the Income-tax Act, 2025 relating to meaning
of specified domestic transaction.
It is proposed to substitute clause (d) of the said section to omit the reference of section
144.
This amendment will take effect from 1st April, 2026.
Clause 43 seeks to amend section 165 of the Income-tax Act, 2025 relating to
determination of arm’s length price.
It is proposed to amend sub-section (7) of the said section to omit the reference of section
144.
This amendment will take effect from 1st April, 2026.
Clause 44 of the Bill seeks to amend section 166 of the Income-tax Act, 2025 relating
to reference to Transfer Pricing Officer.
The said section provides that where an assessee, has entered into an international
transaction or specified domestic transaction in any previous year, and the Assessing Officer
has made a reference for computation of the arm's length price in relation to the said
international transaction or specified domestic transaction to the Transfer Pricing Officer.
Sub-section (7) of the said section 166 provides that where a reference to Transfer
pricing Officer was made under sub-section (1), an order under sub-section (6) has to be
made at any time sixty days before the expiry of the period specified in section 286 or 296,
for making the order of assessment or reassessment or recomputation or fresh assessment.
It is proposed to amend the said sub-section to clarify that where a reference has been
made under sub-section (1), an order under sub-section (6) has to be made at any time before
one month prior to the month in which the period of limitation referred to in section 286 or
296, for making the order of assessment or reassessment or recomputation or fresh
assessment, expires and accordingly, where such period–
(a) expires on the 31st March of any year, the order under sub-section (6) has to be
made on or before the 31st January of that year;
185
(b) expires on the 31st December of any year, the order under sub-section (6)
has to be made on or before the 31st October of that year.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 45 of the Bill seeks to amend section 169 of the Income-tax Act, 2025 relating
to effect to advance pricing agreement.
Sub-section (1) of the said section provides that if return for any tax year covered by an
advance pricing agreement has been furnished by any person, before the date of entering into
the said agreement, he shall, irrespective of anything to the contrary contained in section 263,
furnish a modified return, in accordance with and limited to the agreement, in respect of such
tax years, within three months from the end of the month in which the agreement was entered
into.
It is proposed to substitute the said sub-section so as to provide that where an income is
modified as a result of advance pricing agreement entered into with any person then, such
person shall, or any other person being an associated enterprise, may, furnish a return or a
modified return, as the case may be, in accordance with and limited to the agreement; within
a period of three months from the end of the month in which the said agreement was entered
into, in respect of tax years covered by such agreement.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 46 of the Bill seeks to amend section 195 of the Income-tax Act, 2025 relating to
tax on income referred to in sections 102 to 106.
It is to proposed to amend the said section so as to reduce the rate of income-tax calculated
on income referred to in sections 102 to 106 from 60% to 30%.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 47 seeks to amend section 202 of the Income-tax Act, 2025 relating to new tax
regime for individual Hindu undivided family and others.
It is proposed to omit sub-clause (iii) of clause (a) of sub-section (2) of the said section
to omit the reference of section 144.
This amendment will take effect from 1st April, 2026.
Clause 48 of the Bill seeks to amend section 203 of the Income-tax Act, 2025 relating
to tax on income of certain resident co-operative societies.
186
The said section provides for the deduction not to be allowed on dividends received by
co-operatives.
It is proposed to amend sub-clause (i) of clause (a) of sub-section (1) of the said section
so as to provide that the inter-co-operative societies dividend be allowed as a deduction under
the new tax regime provided under the said section for co-operative societies, to the extent
such dividend is distributed by the cooperative society to its members.
It is further proposed that the income by way of dividend received by federal co-
operative referred to in section 150 from any company in respect of investments made before
the 31st January, 2026 be allowed as deduction in the new tax regime. This deduction is
proposed to be limited to the amount of dividend distributed by the federal cooperative to its
members and which is received on or before 31st March, 2029.
It is also proposed to insert a new sub-section (7) so as to provide that in case of on
assessee, being a co-operative societies, which has exercised option under sub-section (5)
the requirements contained in sub-section (1) shall be modified to the extent that the
deduction under section 149(2)(d)(ii) shall be available to such assessee as does not exceed
the amount of dividend distributed by it to its members at least one month before the due
date for filing the return of income under section 263(1).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 49 of the Bill seeks to amend section 204 of the Income-tax Act, 2025 relating
to tax on income of certain new manufacturing co-operative societies.
The said section provides for the deduction not to be allowed on dividends received by
co-operatives.
It is proposed to amend sub-section (i) of clause (a) of sub-section (1) of the said section
to provide that the inter-co-operative societies dividend be allowed as a deduction under the
new tax regime provided under section 204 for the cooperative societies, to the extent such
dividend is distributed by the cooperative society to its members.
It is further proposed that the income by way of dividend received by federal
cooperatives from any company in respect of investments made before 31st January, 2026
be allowed as deduction in the new tax regime. This deduction is proposed to be limited to
the amount of dividend distributed by the federal cooperative to its members and which is
received on or before 31st March, 2029.
It is also proposed to insert a new sub-section (5) so as to provide that in case of on
assessee, being a co-operative societies, which has exercised option under sub-section (2),
the requirements contained in sub-section (3), shall be modified to the extent that the
deduction under section 149(2)(d)(ii) shall be available to such assessee as does not exceed
187
the amount of dividend distributed by it to its members at least one month before the due
date for filing the return of income under section 263(1).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 50 of the Bill seeks to amend section 206 of the Income-tax Act relating to special
provision for minimum alternate tax and alternate minimum tax.
The said section, inter alia, provides for minimum alternate tax applicable only for
companies. This tax is charged on the book profit of the assessee and not the taxable income
computed under the provisions of the Act. The rate of minimum alternate tax is 15% for
corporates other than units located in an International Financial Services Centre. In case the
minimum alternate tax is higher than the income-tax payable on the company's total income
computed under normal tax provisions, the assessee pays minimum alternate tax and is
allowed credit on the difference.
If a company pays minimum alternate tax when it is higher than regular tax, the excess
amount paid is allowed as a tax credit which can be carried forward up to fifteen years and
can be set off in future years where the company's regular tax liability exceeds the minimum
alternate tax liability.
It is proposed that minimum alternate tax is to be made a final tax in the old regime and
shall be liable to a tax rate of 14% instead of the existing 15%. Further, set-off of minimum
alternate tax credit is to be allowed only in the new tax regime for domestic companies.
However, the amount of set off shall be restricted to 25% of the tax liability. In the case of
foreign companies, set off is proposed to be allowed to the extent of the difference between
the tax on the total income and the minimum alternate tax for the tax year in normal tax is
more than minimum alternate tax.
Clause (l) of sub-section (1) of the said section provides for the provisions pertaining
to minimum alternate tax shall not apply to any assessee, being a foreign company, where
the total income of the assessee comprises solely of profits and gains from business referred
to in section 61(2) (Table: Sl. Nos. 1, 3, 4 and 5), and such income has been offered to tax at
the rates specified in the respective sections. However, certain other specified businesses of
non-residents who have also opted for presumptive taxation under section 61 have not been
so excluded.
It is further proposed to amend the said clause to substitute sub-clause (iii) so as to
provide that the specified businesses shall also be excluded from the applicability of
minimum alternate tax.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
188
Clause 51 of the Bill seeks to substitute sections 217 and 218 of the Income-tax Act, 2025
relating to benefit under Chapter to be available in certain cases even after assessee becomes
resident and Chapter not to apply if the assessee so chooses, respectively, with new sections.
The proposed section 217 provides for application of benefits under sections 212 to 216.
It is proposed to substitute the said sections so as to give effect to the proposal related to
taxation of income of Offshore Banking Units and Units of International Financial Services
Centre in non-holiday period.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 52 seeks to amend section 227 of the Income-tax Act, 2025 relating to
computation of tonnage income.
Sub-section (4) of the said section provides that the tonnage shall mean the tonnage of
a ship or inland vessel, as the case may be, indicated in the certificate referred to in sub-
section (9) of the said section.
It is proposed to amend clause (a) of sub-section (4) of the said section so as to
substitute the word “certificate” with the words “valid certificate”.
Sub-clause (iii) of clause (b) of sub-section (9) of the said section provides that in case
of inland vessel registered in India, a valid certificate shall mean a certificate issued under
the Inland Vessels Act, 2021.
It is proposed to amend the said sub- clause so as to substitute the word “certificate”
with the words “certificate of registration”.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply
in relation the tax year 2026-2027 and subsequent years.
Clause 53 seeks to amend section 228 of the Income-tax Act, 2025 relating to relevant
shipping income and exclusion from book profit.
Item (A) of sub-clause (ii) of clause (b) of sub-section (3) of the said section provides
that on-board or on-shore activities of passenger ships would be included in the core
activities of a tonnage company.
It is proposed to amend the said item so as to bring inland vessels also under its ambit.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
189
Clause 54 seeks to amend section 232 of the Income-tax Act, 2025 relating to certain
conditions for applicability of tonnage tax scheme.
Sub-section (12) of the said section provides that a tonnage tax company shall comply
with the minimum training requirement in respect of trainee officers as per the guidelines
issued by the Director-General of Shipping and notified by the Central Government.
It is proposed to amend the said sub-section so as to insert reference to Inland
Waterways Authority of India, in case of inland vessels.
Sub-section (13) of the said section provides that a tonnage tax company is required to
furnish a copy of the certificate issued by the Director-General of Shipping to the effect that
such company has complied with the minimum training requirement a per the relevant
guidelines along with the return of income under section 263.
It is further proposed to amend the said sub-section so as to insert reference to
designated authority as appointed by the respective State Governments under the Inland
Vessels Act, 2021.
Sub-section (17) of the said section provides that the average of net tonnage shall be
computed in the manner prescribed, in consultation with the Director-General of Shipping.
It is also proposed to amend the said sub-section so as to insert reference to the Inland
Waterways Authority of India.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 55 seeks to amend section 235 of the Income-tax Act, 2025 relating to
interpretation for certain expressions in Part G of Chapter XIII.
It is proposed to amend the said section to insert new sub-clause (fa) so as to provide
that “Inland Waterways Authority of India” shall have the same meaning as assigned to it in
section 3 of the Inland Waterways Authority of India Act, 1985.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 56 of the Bill seeks to amend section 262 of the Income-tax Act, 2025 relating to
Permanent Account Number.
The said section provides that the Board may make rules to provide for categories of
documents pertaining to business or profession in which Permanent Account Number shall
be quoted by every person;
190
It is proposed to amend clause (c) of sub-section (10) of the said section so as to enable
the Central Board of Direct Taxes to make rules for quoting of Permanent Account Number
in documents in such transactions which do not relate to business or profession.
This amendment will take effect from 1st April, 2026.
Clause 57 of the Bill seeks to amend section 263 of the Income-tax Act, 2025 relating
to return of income.
Clause (c) of sub-section (1) of said section defines the expression “due date” as the
date of the financial year succeeding the relevant tax year for filing the return of income by
different classes of assessee or person with different conditions applied therein.
It is proposed to substitute said clause (c) for the purposes of this section “due date” in
respect of the persons mentioned column B of the Table below, subject to the conditions
mentioned in column C of the said Table, shall be the due date of the financial year
succeeding the relevant tax year as mentioned in column D thereof:
TABLE
Sl. No.
Person
Conditions
Due date
A
B
C
D
1.
Assessee, including the partners
of the firm or the spouse of such
partner (if section 10 applies to
such spouse).
Where
the
provisions
of
section
172
apply.
30th
November.
2.
(i) Company;
(ii) Assessee (other than a
company) whose accounts are
required to be audited under this
Act or under any other law in
force;
(iii) partner of a firm whose
accounts are required to be
audited under this Act or under
any other law in force; or the
spouse of such partner (if
section 10 applies to such
spouse).
Where
the
provisions
of
section 172 do
not apply.
31st
October.
191
3.
(i) Assessee having income
from profits and gains of
business or profession whose
accounts are not required to be
audited under this Act or under
any other law in force;
(ii) partner of a firm whose
accounts are not required to be
audited under this Act or under
any other law in force or the
spouse of such partner (if
section 10 applies to such
spouse).
Where
the
provisions
of
section 172 do
not apply.
31st
August.
4.
Any other assessee.
31st July.
Sub-section (5) of the said section deals with the revised return of income. It allows a
person who has already furnished a return under section 263(1) and (4) to file a revised
return, if any omission or wrong statement is discovered in the original or belated return.
Such revised return required to be furnished within nine months from the end of the relevant
tax year or before completion of assessment, whichever is earlier.
It is further proposed to amend the said section so as to increase the prescribed time
limit for filing the revised return from its existing time limit of nine months to twelve months
from the end of the relevant tax year.
The said section provides for comprehensive framework that lays down the class of
persons who are required to file a return, the due dates, and the different types of returns that
may be furnished. It covers the original return, belated return, revised return and updated
return.
Sub-section (6) of the said section provides for the updated return of income. It allows
a taxpayer, whether or not a return was furnished earlier, to file an updated return within
forty-eight months from the end of the financial year succeeding the relevant tax year. This
provision promotes voluntary compliance on the part of taxpayer to offer the income for
taxation.
Sub-clause (v) of clause (c) of the said sub-section prohibits filing of updated return
in such cases where any proceedings for assessment or reassessment or recomputation or
revision of income is pending or has been completed for the said tax year.
It is proposed to amend the said sub-section so that an updated return may be
furnished by a person for the relevant tax year in pursuance of a notice issued under section
192
280 within such period as specified in the said notice and in such a case, the assessee shall
be precluded from filing of return in pursuance of the said notice in any other manner.
It is also proposed to provide the filing of updated return for reducing the loss in specified
circumstances.
It is also proposed to amend clause (e) of sub-section (6) of the said section so as
to give the reference of “206(3) and (4)” instead of “206(l)(m) to (p)”.
These amendments will take effect from 1st April, 2026.
Clause 58 of the Bill seeks to amend section 266 of the Income-tax Act, 2025 relating to
self-assessment.
It is proposed to make consequential amendments in order to bring the changes proposed
in the minimum alternate tax regime by giving reference of section 206(3) and (4) instead of
206(1) (m) to (p).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 59 of the Bill seeks to amend section 267 of the Income-tax Act, 2025 relating to
tax on updated return.
It is proposed to make consequential amendments in order to bring changes proposed in
the minimum alternate tax regime by giving reference of section 206(3) and (4) instead of
section 206(1)(m) to (p).
Sub-section (5) of the said section provides that additional income-tax amounting to 25%,
50%, 60% and 70% of the aggregate of tax and interest payable, shall be paid alongwith
original tax and interest payable, for filing the updated return in first, second, third and fourth
year, respectively from the end of the financial year succeeding the relevant tax year.
It is proposed to amend the said sub-section so as to prescribe that where an updated
return is filed in pursuance of a notice issued under section 280 within the period specified
in the said notice, the additional income-tax payable shall be increased by a further sum of
10 % of the aggregate of tax and interest payable on account of furnishing the updated return.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 60 seeks to amend section 270 of the Income-tax Act, 2025 relating to assessment.
It is proposed to amend sub-clause (vi) of clause (a) of sub-section (1) of the said section
to omit the reference of section 144.
193
This amendment will take effect from 1st April, 2026.
Clause 61 of the Bill seeks to amend section 275 of the Income-tax Act, 2025 relating
to reference to Dispute Resolution Panel.
The said section, inter alia, provides for the procedure and scheme for making a
reference to the Dispute Resolution Panel in respect of certain eligible assessee. Further,
section 286 of the said Act provides for the time limits for completion of assessment,
reassessment and recomputation proceedings and sets the time limit for concluding such
proceedings.
The Dispute Resolution Panel mechanism, as provided under section 275 of the said
Act provides for a specific procedure as below:––
(i) filing of objections before the Dispute Resolution Panel — within thirty days
from the date of receipt of the draft assessment order;
(ii) issuance of directions by the Dispute Resolution Panel — within nine months
from the end of the month in which the draft assessment order is forwarded to the eligible
assessee; and
(iii) passing of the final assessment order — irrespective of anything contained in
section 286 of the said Act, within one month from the end of the month in which the
directions of the Dispute Resolution Panel are received, as mandated under section
275(14) of the said Act.
In cases where the assessee accepts the draft assessment order and does not file
objections before the Dispute Resolution Panel, the Assessing Officer is required,
notwithstanding anything contained in sections 286 of the said Act, as the case may be, to
pass the final assessment order within one month from the end of the month in which the
period specified for filing objections expires, in terms of section 275(4) of the said Act.
It is proposed to amend sub-sections (4) and (14) of section 275 of the said Act so as
to clarify that the period available to the Assessing Officer under the section shall be in
addition to the period available to him under section 286 of the said Act.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 62 of the Bill seeks to amend section 279 of the Income-tax Act, 2025 relating
to income escaping assessment.
Vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020, section 144B and 151A have been inserted in the Income-tax Act, 1961. Further,
section 144B of the Act prescribes a statutory procedure for faceless assessments with effect
from 1st April, 2021.
194
Section 147 of the Income-tax Act, 1961 empowers the Assessing Officer to assess,
reassess, or recompute income if any income chargeable to tax has escaped assessment for a
particular assessment year. Further, section 148 of the Act, Assessing Officer is mandated
to issue a notice to the assessee so as to furnish a return of income where income chargeable
to tax has escaped assessment.
The Finance Act, 2021 had inserted section 148A in the Income-tax Act, 1961 with
effect from 1st April 2021 to introduce a mandatory pre-notice inquiry process and
opportunity of hearing before issuance of a notice under section 148. The provision requires
the Assessing Officer to conduct an inquiry, if required, with prior approval of the specified
authority, provide the assessee with a show cause notice along with information suggesting
escapement of income, and grant an opportunity of being heard. After considering the
assessee’s reply, the Assessing Officer is required to pass a reasoned order under sub-section
(3) of section 148A, as the case maybe, determining whether it is a fit case for issuance of
notice under section 148. The said order under sub-section (3) of section 148A is issued with
the prior approval of the specified authority.
It is proposed to amend section 279 of the Income-tax Act, 2025 so as to align it with
proposed insertion of section 147A of the Income-tax Act, 1961 to provide that the
“Assessing Officer” for the purposes of sections 280 and 281 shall mean to be an Assessing
Officer other than the National Faceless Assessment Centre or any assessment unit referred
to in section 273(3).
This amendment will take effect from 1st April, 2026.
Clause 63 of the Bill seeks to amend section 286 of the Income-tax Act, 2025 relating to
the time limit for completion of assessment, reassessment and recomputation.
Section 286 of the said Act provides for the time limits for completion of assessment,
reassessment, and recomputation proceedings and sets the outer time limit for concluding
such proceedings.
It is proposed to amend sub-section (2) of the said section so as to clarify that in terms of
provisions of section 286(1) [Table: Sl No. 1 to 4] and sub-section (2), the draft of the
proposed order of assessment referred to in section 275 shall be made at any time up to the
time limit of assessment, reassessment or recomputation referred in the said table and the
said sub-section.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 64 of the Bill seeks to amend section 295 of the Income-tax Act, 2025 relating
to undisclosed income of any other person.
195
The said section provides for taxing undisclosed income where the Assessing officer is
satisfied that any undisclosed income belongs to or pertains to or relates to any person in
whose case search is not initiated or requisition is not made.
It is proposed to amend sub-section (2) of the said section so as to limit the period of
block assessment in case of third party where incriminating material has bearing on the
undisclosed income of only a single tax year immediately preceding the tax year in which
search is initiated or requisition is made.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 65 of the Bill seeks to amend section 296 of the Income-tax Act, 2025 relating
to time-limit for completion of block assessment.
Section 296 of the Act, provides for time-limit for completing a block assessment. An
assessment or reassessment order under section 294 (procedure for block assessment) must
be completed within twelve months from the end of the quarter in which the last search
authorization was executed or requisition was made. While, the time-limit for completion of
block assessment of any other person shall be twelve months from the end of the quarter in
which the notice under section 294 in pursuance of section 295, was issued to such other
person.
It is proposed to amend the said section so as to take the date of initiation of search as
the reference point to decide the date of limitation for block assessment and consequently,
the period of twelve months is proposed to be to eighteen months from the end of the quarter
in which search was initiated or requisition was made.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 66 of the Bill seeks to amend section 332 of the Income-tax Act, 2025 relating to
application for registration.
It is proposed to amend clause (f) of sub-section (1) of the said section to give reference
of “Schedule VII [Table : S. Nos. 17 to 19]”.
This amendment will take effect from 1st April, 2026.
Clause 67 of the Bill seeks to amend section 349 of the Income-tax Act, 2025 relating to
return of income under Chapter XVII.
It is proposed to amend the said section so as to provide the reference of section 263(4)
therein.
196
This amendment will take effect from 1st April, 2026.
Clause 68 of the Bill seeks to amend section 351 of the Income-tax Act, 2025 relating
to specified violation.
It is proposed to amend clause (b) of sub-section (1) of the said section so as to omit
the reference of section 346 and further to make consequential amendment thereto.
This amendment will take effect from 1st April, 2026.
Clause 69 of the Bill seeks to amend section 352 of the Income-tax Act relating to tax on
accreted income.
It is proposed to substitute serial number 8 and entries relating thereto of the Table in
sub-section (4) of the said section so as to provide that the specified person shall be liable to
pay tax on accreted income, where it has merged with, any other __
(a)
entity other than a registered non-profit organisation; or
(b)
registered non-profit organisation having objects same or similar to it but the
said merger does not fulfil such conditions, as may be prescribed; or
(c)
registered non-profit organisation that does not have same or similar objects.
This amendment will take effect from 1st April, 2026.
Clause 70 of the Bill seeks to insert a new section 354A in the Income-tax Act, 2025
relating to merger of registered non-profit organisations in certain cases.
It is proposed to insert a new section 354A so as to provide that where any registered
non-profit organisation has merged with any other registered non-profit organisation, the
provisions of section 352 shall not apply if, —
(a) the other registered nonprofit organisation has same or similar objects; and
(b) the said merger fulfils such conditions as may be provided by rules.
This amendment will take effect from 1st April, 2026.
Clause 71 of the Bill seeks to amend section 379 of the Income-tax Act, 2025 relating to
Dispute Resolution Committee.
The said section provides for the constitution of Dispute Resolution Committee to resolve
disputes of specified small and medium taxpayers in a cost-effective and expeditious manner.
The said Committee is empowered to reduce or waive penalties and grant immunity from
prosecution, subject to certain conditions, with the objective of reducing litigation. The
197
section lays down eligibility, procedure, and binding nature of the Dispute Resolution
Committee order, promoting voluntary compliance and speedy dispute resolution.
It is proposed to consequentially amend sub-section (2) of section 379 to give reference
of the amendment proposed in section 471 to provide that penalty for under-reporting of
income leviable under section 439 imposed in the assessment order may be waived by the
Dispute Resolution Committee.
This amendment will take effect from 1st April, 2026.
Clause 72 seeks to amend section 393 of the Income-tax Act, 2025 relating to tax to be
deducted at source.
It is proposed to make consequential amendment in sub-section (1) of the said section
regarding cross reference.
Sub-section (4) [Table: Sl. No. 7] of the said section provides for condition where tax
is not required to be deducted at source in respect of interest on income other than interest
on securities referred to in sub-section (1) [Table Sl. No. 5(ii) and 5(iii)] of the said section.
It is further proposed to amend clause (a)(i) of sub-section (4) [Table: Sl. No. 7. C] so
as to provide that interest income paid or credited to any co-operative society engaged in
carrying on the business of banking (including a co-operative land mortgage bank) shall be
exempt from applicability of deduction of tax at source.
It is also proposed to amend clause (b)(c)(iv) thereof so as to provide for non-
applicability of tax to be deducted at source on the payment or credit of interest on the
compensation amount awarded by a Motor Accidents Claims Tribunal, in case of deductee
being an individual. For persons other than individuals, the earlier threshold of ₹50000 in
the said clause shall continue.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
It is also proposed to insert a new sub-section (6A) in the said section so as to allow
depository to accept declaration from the assessee as per the provisions of section 393(6) of
the said Act and provide it to the person responsible for paying income of the nature referred
to in 393(1) [Table: Sl. Nos. 4(i), 5(i) and 7] within a fixed timeline. However, this additional
option shall be available only to those investors who have held the securities in the depository
as defined in section 2(e) of the Depositories Act, 1996 and where the securities are listed in
a registered stock exchange in India.
It is also proposed to make consequential amendments in sub-section (7) of the said
section.
These amendments will take effect from 1st April, 2027 and will, accordingly, apply in
relation to the tax year 2027-2028 and subsequent years.
198
Clause 73 of the Bill seeks to amend section 394 of the Income-tax Act, 2025 relating
to collection of tax at source.
Sub-section (1) of the said section, inter alia, provides that every person shall collect
tax at source at the time of debiting of the amount payable or at the time of receipt of such
amount from the buyer or licensee or lessee, as the case may be, whichever is earlier, on
the receipts specified in that said sub-section.
It is proposed to amend the said sub-section so as to rationalise the rates of tax
collected at source for the purpose of sale of––
(i) alcoholic liquor for human consumption;
(ii) tendu leaves;
(iii) scrap; and
(iv) minerals being coal or lignite or iron ore,
tax will be required to be collected at source at the rate of 2%.
It is further proposed to amend the said sub-section so as to require that for
remittances made under the Reserve Bank of India’s Liberalised Remittance Scheme for
the purposes of education or medical treatment, tax will be collected at source at the rate
of 2% instead of the existing rate of 5%.
It is also proposed to amend the said sub-section so as to remove the threshold of 10
lakhs on sale of overseas tour program package for applicability of tax collected at source
at higher rate of 20% and to require that on sale of overseas tour program package, tax be
collected at source at the rate of 2% irrespective of the amount.
These amendments will take effect from 1st April, 2026.
Clause 74 seeks to amend section 395 of the Income-tax Act, 2025 relating to
certificates.
Sub-section (1) of the said section provides for issuance of certificate for tax deduction
at source at Nil or lower rates.
It is proposed to insert a new sub-section (6) in the said section so as to provide that the
application referred to in sub-section (1) of the said section may also be filed before the
prescribed income-tax authority, subject to such conditions as may be provided by rules, and
such authority on electronic verification of the contents of the application, may either issue
a certificate for lower or no deduction or, as the case may be, reject such application for non-
fulfillment of the prescribed conditions or on account of the application being incomplete.
This amendment will take effect from 1st April, 2026.
Clause 75 of the Bill seeks to amend section 397 of the Income-tax Act, 2025 relating to
compliance and reporting.
199
Clause (a) of sub-section (1) of the said section requires that every person, deducting or
collecting tax shall apply to the Assessing Officer for the allotment of a “tax deduction and
collection account number”.
Clause (c) of sub-section (1) of the said section provides that the provisions of clause (c)
shall not apply in certain cases specified therein.
It is proposed to substitute clause (c) of the said sub-section so as to provide that the
provisions of clause (a) shall not apply to––
(i) a person in respect of transaction where he is required to deduct tax under section
393(1) [Table: Sl. Nos. 2(i), 3(i) or 6(ii)]; or
(ii) a person referred to in section 393(4) [Table : Sl. No. 12.C(a)] in respect of
transaction where he is required to deduct tax on consideration for transfer of a virtual
digital asset under section 393(1) [Table : Sl. No. 8(vi)]; or
(iii) a resident individual or Hindu undivided family in respect of transaction where
he is required to deduct tax on any consideration for the transfer of any immovable
property
under
the
provisions
of
section
393(2)
[Table : Sl. No. 11]; or
(iv) a person notified in this regard by the Central Government.
This amendment will take effect from 1st October, 2026.
Clause 76 of the Bill seeks to amend section 399 of the Income-tax Act, 2025 relating to
processing.
It is proposed to amend the said section so as to provide the reference of section 427 (1)
and (2).
This amendment will take effect from 1st April, 2026 and accordingly, will apply in
relation to the tax year 2026-2027 and subsequent year.
Clause 77 of the Bill seeks to amend section 400 of the Income-tax Act 2025 relating to
power of Central Government to relax provisions of Chapter XIX.
Sub-section (2) of the said section provides that the Board may, with the previous
approval of the Central Government, issue guidelines to remove any difficulty arising in
giving effect to the provisions of the said Chapter and such guidelines shall be laid before
each House of Parliament.
It is proposed to amend the said sub-section so as to provide that the guidelines issued
shall be binding on the income-tax authorities and on the person liable to deduct or collect
income-tax.
200
This amendment will take effect from 1st April, 2026.
Clause 78 of the Bill seeks to amend section 402 of the Income-tax Act, 2025 relating
to interpretation for the purposes of Chapter XIX-B.
Clause (27) of the said section provides for the definition of the expression “person
responsible for paying”.
Sub-clause (c) of the said clause provides that in case of payment of any sum to a non-
resident where such sum represents consideration for the transfer by him of any foreign
exchange asset, which is not a short-term capital asset, the authorised person responsible for
remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident
(External) Account.
It is proposed to amend the said sub-clause to clarify that the term “authorised person”
referred to therein shall have the same meaning as assigned to it in clause (c) of section 2 of
the Foreign Exchange Management Act, 1999.
Clause (47) of the said section defines the expression “work”.
It is further proposed to amend the said clause so as to include supply of manpower
under the ambit of “work” for the applicability of tax deducted at source as per of section
393(1) [Table: Sl. Nos. 6(i) or 6(ii)].
This amendment will take effect from 1st April, 2026.
Clause 79 of the Bill seeks to amend section 411 of the Income-tax Act, 2025 relating to
when tax payable and when assesse deemed in default.
The said section provides that the payment and recovery of tax demand, stating that any
amount specified in a notice of demand under section 289 must be paid within thirty days of
service of the notice. If the assessee fails to pay within this period, they are deemed to be in
default and become liable to interest under sub-section (3) of section 289, along with possible
recovery proceedings such as attachment of property. The Assessing Officer may, however,
allow payment by instalments or extend the time for payment, subject to conditions, to
provide relief in genuine cases.
It is proposed to consequentially amend the sub-section (3) of the said section so as to
provide for charging of interest under the said sub-section in respect of any demand raised
on account of penalty levied under section 439 only after passing of the order by the
Commissioner of Income tax Appellate Tribunal (for appeal against order passed in
pursuance of directions issued by the Dispute Resolution Panel), as the case may be.
This amendment will take effect from 1st April, 2026.
201
Clause 80 of the Bill seeks to amend section 423 of the Income-tax Act 2025 relating to
interest for defaults in furnishing return of income.
It is proposed to make consequential amendments in order to bring changes proposed in
the minimum alternate tax regime by giving reference of section 206(3) and (4) instead of
section 206(1)(m) to (p).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 81 of the Bill seeks to amend section 424 of the Income-tax Act 2025 relating
to interest for defaults in payment of advance tax.
It is proposed to make consequential amendments in order to bring changes proposed in
the minimum alternate tax regime by giving reference of section 206(3) and (4) instead of
section 206(1)(m) to (p).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 82 of the Bill seeks to amend section 425 of the Income-tax Act 2025 relating to
interest for deferment of advance tax.
It is proposed to make consequential amendments in order to bring changes proposed in
the minimum alternate tax regime by giving reference of section 206(3) and (4) instead of
section 206(1)(m) to (p).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 83 of the Bill seeks to substitute sections 427 and 428 of the Income-tax Act
relating to fee for default in furnishing statements and fee for default in furnishing return of
income.
The proposed section 427 provides for fee for default in furnishing statements.
Sub-section (1) of the proposed section 427 provides that without prejudice to the
provisions of this Act, where any person fails to deliver or cause to be delivered a statement
as per section 397(3)(b) within the time as may be provided by rules therein, he shall be
liable to pay by way of fee, a sum of ₹200 for every day for which such failure continues.
Sub-section (2) of the proposed section 427 provides that the amount of fee referred to in
sub-section (1) shall not exceed the amount of tax deductible or collectible and be paid before
delivering or causing to be delivered the statement, as per sub-section (1).
202
Sub-section (3) of the proposed section 427 provides that without prejudice to the
provisions of this Act, if any person who is required to furnish a statement of financial
transaction or reportable account under section 508(1), fails to furnish such statement within
the time as may be provide by rules under section 508(2), he shall be liable to pay by way of
fee, a sum of ₹ 200 for every day for which such failure continues and such fee shall not
exceed a sum of ₹ 100000.
The proposed section 428 provides for fee for default in furnishing return of income,
audited accounts and reports.
Clause (a) of the proposed section 428 provides that where any person required to furnish
a return of income under section 263, fails to do so within the due date as specified in sub-
section (1) of said section, he shall be liable to pay by way of fee, a sum of ₹ 1000, if the
total income of such person does not exceed ₹ 500000 and a sum of ₹ 5000, in any other
case.
Clause (b) of the proposed section 428 provides that where any person furnishes a return
of income under section 263(5) beyond nine months from the end of relevant tax year, he
shall liable to pay by way of fee, a sum of ₹ 1000, if the total income of such person does not
exceed ₹ 500000 and a sum of ₹ 5000, in any other case.
Clause (c) of the proposed section 428 provides that where any person fails to get his
accounts audited for any tax year or years and furnish the report of such audit as required
under section 63, he shall be liable to pay by way of fee, a sum of ₹ 75000 for a delay upto
one month for which such failure continue and a sum of ₹ 150000 thereafter.
Clause (d) of the proposed section 428 provides that where any person fails to furnish a
report from an accountant as required by section 172, he shall be liable to pay by way of fee,
a sum of ₹ 50000 for a delay up to one month for which such failure continues and a sum of
₹ 100000 thereafter.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 84 of the Bill seeks to amend section 439 of the Income-tax Act, 2025 relating to
penalty for under-reporting and misreporting of income.
Sub-section (11) of the said section provides the categories of cases of misreporting of
income referred to in sub-section (10).
It is proposed to amend the said sub-section (11) so as to include the income referred to
in section 195(1)(b) within the ambit of income referred to in sub-section (10).
It is further proposed to insert a new sub-section (13A) so as to provide that where
additional income-tax is paid in accordance with section 267(5)(ii), the income on which
such additional income-tax is paid shall not form the basis of imposition of penalty.
203
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 85 of the Bill seeks to amend section 440 of the Income-tax Act, 2025 relating
to immunity from imposition of penalty, etc.
The said section, inter alia, provides the procedure for granting immunity by the
Assessing Officer from imposition of penalty or initiation of prosecution, if assessee fulfils
certain conditions specified therein.
Under the said section immunity is granted only in the cases of under-reporting of
income and not in the case of misreporting of income.
It is proposed to amend the said section by substituting sub-sections (1) to (4) thereof
so as to extend such immunity––
(i) for misreporting of income [under section 439 (11) (a) to (f)], on payment
of the tax and interest payable as per the order of assessment or reassessment under
section 270(10) or section 279, along with additional income-tax amounting to 100%
of the amount of tax payable on under-reported income, in lieu of penalty and no
appeal has been filed;
(ii) for income referred to in sections 102 to 106 [under section 439 (11) (g)],
on payment of the tax and interest payable as per the order of assessment or
reassessment under section 270(10) or section 279, along with additional income-
tax amounting to 120% of the amount of tax payable on under-reported income, in
lieu of penalty and no appeal has been filed.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply
in relation to the tax year 2026-2027 and subsequent years.
Clause 86 of the Bill seeks to omit section 443 of the Income-tax Act, 2025 relating to
penalty in respect of certain income.
It is proposed to omit the said as a consequential amendment made in section 439 of the
said Act.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 87 of the Bill seeks to substitute section 446 of the Income-tax Act, 2025 relating
to failure to get accounts audited.
The proposed new section provides for penalty for failure to furnish information or for
furnishing inaccurate information on transaction of crypto-asset.
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Sub-section (1) of the proposed section seeks to provide that if any person who is required
to furnish a statement in respect of transaction of crypto-asset under section 509(1), fails to
furnish such statement within the time as provided by rules under the said section, the
income-tax authority as may be provided by rules under that section may impose on him, a
penalty of ₹ 200 for every day during which such failure continues.
Sub-section (2) of the proposed new section seeks to provide that the said income-tax
authority may impose a penalty of ₹ 50000 on a person required to furnish a statement under
sub-section (1) of the section 509, if such person provides inaccurate information in the
statement and fails to remove such inaccuracy as per section 509(4) or fails to comply with
due diligence the requirement under section 509(5).
This amendment will take effect from 1st April, 2026.
Clause 88 of the Bill seeks to omit section 447 of the Income-tax Act relating to penalty
for failure to furnish report under section 172.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 89 of the Bill seeks to substitute section for 454 of the Income-tax Act, 2025
relating to penalty for failure to furnish statement or reportable account.
The proposed section provides Penalty for failure to furnish statement of financial
transaction or reportable account after notice.
The said section provides that where any person, who is required to furnish a statement
of financial transaction or reportable account under section 508(1), fails to furnish such
statement or reportable account within the period specified in the notice issued under section
508(7), the income-tax authority prescribed under section 508(1) may impose on him, a
penalty of ₹ 1000 for every day for which such failure continues, beginning from the day
immediately after the time specified in such notice for furnishing such statement or
reportable account expires and such penalty shall not exceed ₹ 100000.
This amendment will take effect from 1st April, 2026 and accordingly, will apply in
relation to the tax year 2026-2027 and subsequent year.
Clause 90 of the Bill seeks to amend section 466 of the Income-tax Act, 2025 relating
to penalty for failure to comply with the provisions of section 254.
Section 254 of the said Act provides the power to the income-tax authorities to collect
information from the premises where business or profession is carried out, by directing the
proprietor or employee or any other person, who may, at that time and place, be attending in
any manner to, or helping in, or carrying on of such business or profession, to furnish certain
information as authorised.
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Further, the provisions of section 466 of the said Act provide for penalty on such
persons who fail to comply with the provisions of section 254, that is power to collect
information, and does not furnish the requisite information to the authorised income-tax
authorities. The said section further empowers to the Joint Commissioner, Deputy Director
or Assistant Director or the Assessing officer to impose maximum penalty amounting to
₹1000.
It is proposed to amend the said section so as to enhance the maximum amount of
penalty from existing ₹ 1000 to ₹ 25000.
This amendment will take effect from 1st April, 2026.
Clause 91 of the Bill seeks to amend section 470 of the Income-tax Act, 2025 relating to
penalty not to be imposed in certain cases.
It is proposed to omit the reference of section 447.
This amendment will take effect from 1st April, 2026 and accordingly, will apply in
relation to the tax year 2026-2027 and subsequent year.
Clause 92 of the Bill seeks to amend section 471 of the Income-tax Act, 2025 relating to
procedure for imposition of penalty.
The said section provides the procedure for imposing penalties and mandates that no
penalty shall be levied unless the assessee is given a reasonable opportunity of being heard.
It requires the Assessing Officer to issue a show-cause notice for which the penalty is
proposed, and in certain cases, prior approval of higher authorities is necessary before
imposing the penalty. The section ensures adherence to the principles of natural justice and
aims to prevent arbitrary or invalid penalty proceedings.
It is proposed to amend the said section so as to provide that penalty for under-reporting
of income leviable under section 439 shall be imposed in the assessment order made on or
after 1st April, 2027.
This amendment will take effect from 1st April, 2026.
Clause 93 of the Bill seeks to amend section 473 of the Income-tax Act, 2025 relating
to contravention of order made under section 247.
The said section, inter alia, provides that whoever contravenes any order referred to in
section 247(4) shall be punishable with rigorous imprisonment which may extend to two
years and shall also be liable to fine.
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It is proposed to amend said section so as to substitute “rigorous imprisonment for a
term which may extend to two years and shall also be liable to fine” with “simple
imprisonment up to two years and fine”.
This amendment will take effect from 1st April, 2026.
Clause 94 of the Bill seeks to amend section 474 of the Income-tax Act, 2025 relating to
failure to pay tax collected at source.
The said section, inter alia, provides that if a person, who is required to afford the
authorised officer with the necessary facility to inspect the books of account or other
documents, under section 247(1)(ii), fails to do so, he shall be punishable with rigorous
imprisonment for a term which may extend to two years and shall also be liable to fine.
It is proposed to amend said section so as to substitute the “rigorous imprisonment for a
term which may extend to two years and shall also be liable to fine” with “simple
imprisonment up to six months or with fine or with both”.
This amendment will take effect from 1st April, 2026.
Clause 95 of the Bill seeks to amend section 475 of the Income-tax Act, 2025 relating
to removal, concealment, transfer or delivery of property to prevent tax recovery.
The said section, inter alia, provides that whoever, fraudulently removes, conceals,
transfers or delivers to any person, any property or any interest therein, with the intent to
prevent such property or interest therein from being taken in execution of a certificate drawn
under section 413, shall be punishable with rigorous imprisonment for a term which may
extend to two years and shall also be liable to fine.
It is proposed to amend said section so as to substitute “rigorous imprisonment for a
term which may extend to two years and shall also be liable to fine” with “simple
imprisonment up to two years and fine”.
This amendment will take effect from 1st April, 2026.
Clause 96 of the Bill seeks to amend section 476 of the Income-tax Act, 2025 relating to
failure to pay tax to credit of Central Government under Chapter XIX-B.
The said section, inter alia, provides that if a person fails to pay the tax deducted at source
into the account of Central Government or fails to pay tax or ensure payment of tax to the
credit of Central Government in certain cases under the provision of section 393 of the Act.
It is proposed to amend sub-section (1) of said section so as to provide that if a person
fails to pay tax deducted at source or ensure payment of tax in case of winnings from online
games under section 476(1)(b)(i) and consideration from virtual digital asset under section
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476(1)(b)(ii) excluding such winnings and such consideration which are wholly in kind and
shall be punishable ––
(i) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where amount of such tax exceeds fifty lakh rupees;
(ii) with simple imprisonment for a term up to six months, or with fine, or with
both, in a case where amount of such tax exceeds ten lakh rupees but does not exceed
fifty lakh rupees;
(iii) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 97 of the Bill seeks to amend section 477 of the Income-tax Act, 2025 relating to
failure to pay tax collected at source.
The said section ,inter alia, that if a person fails to pay the tax collected by him to the
credit of the Central Government, as required under section 397(3)(a), he shall be punishable
with rigorous imprisonment for a term which shall not be less than three months but which
may extend to seven years, and with fine.
It is proposed to amend sub-section (1) of the said section so as to provide that if a person
fails to pay the tax collected by him to the credit of the central government as required under
section 397(3)(a), he shall be punishable––
(a) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where amount of such tax exceeds fifty lakh rupees;
(b) with simple imprisonment for a term up to six months or with fine, or with both,
in a case where amount of such tax exceeds ten lakh rupees but does not exceed fifty
lakh rupees;
(c) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 98 of the Bill seeks to substitute section 478 of the Income-tax Act, 2025 relating
to wilful attempt to evade tax, etc.
Sub-section (1) of the said section,inter alia, provides that if a person wilfully attempts
in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable, or
under-reports his income, under this Act in a case, where the amount sought to be evaded or
tax on under-reported income exceeds twenty-five lakh rupees, with rigorous imprisonment
for a term which shall not be less than six months but which may extend to seven years, and
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with fine and in any other case, with rigorous imprisonment for a term which shall not be
less than three months but which may extend to two years, and with fine.
Sub-section (2) of the said section, inter alia, provides that if a person wilfully attempts
in any manner to evade the payment of any tax, penalty or interest under this Act, he shall
be punishable with rigorous imprisonment for a term which shall not be less than three
months but which may extend to two years and shall, in the discretion of the court, also be
liable to fine.
It is proposed to amend the said sub-section (1) of the said section so as to provide that
if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest
chargeable or imposable, or under-reports his income, under this Act, he shall be punishable–
–
(a) with simple imprisonment for a term up to two years, or with fine, or with both, in a
case where the amount sought to be evaded or tax on under-reported income exceeds fifty
lakh rupees;
(b) with simple imprisonment for a term up to six months, or with fine, or with both, in a
case where the amount sought to be evaded or tax on under-reported income exceeds ten lakh
rupees but does not exceed fifty lakh rupees;
(c) with fine, in any other case.
It is proposed to substitute sub-section (2) of the said section so as to provide that if a
person wilfully attempts in any manner to evade payment of tax of penalty under this Act
shall be punishable––
(a) with simple imprisonment for a term up to two years, or with fine, or with both, in a
case where the amount sought to be evaded exceeds fifty lakh rupees;
(b) with simple imprisonment for a term up to six months, or with fine, or with both, in a
case where the amount sought to be evaded exceeds ten lakh rupees but does not exceed fifty
lakh rupees;
(c) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 99 of the Bill seeks to amend section 479 of the Income-tax Act, 2025 relating to
failure to furnish returns of income.
The said section,inter alia, provides that if a person wilfully fails to furnish in due time
the return of income, which is required to be furnished under section 263(1), or by notice
given under sections 268(1) or 280, he shall be punishable,— (a) in a case, where the amount
of tax, which would have been evaded if the failure had not been discovered, exceeds twenty-
five lakh rupees, with rigorous imprisonment for a term which shall not be less than six
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months but which may extend to seven years, and with fine; (b) in any other case, with
imprisonment for a term which shall not be less than three months but which may extend to
two years and with fine.
It is proposed to amend the said section so as to provide that––
(a) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where the amount of tax, which would have been evaded if the failure had not
been discovered, exceeds fifty lakh rupees;
(b) with simple imprisonment for a term up to six months, or with fine, or with both,
in a case where the amount of tax, which would have been evaded if the failure had not
been discovered, exceeds ten lakh rupees but does not exceed fifty lakh rupees;
(c) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 100 of the Bill seeks to substitute sections 480 and 481 of the Income-tax Act,
2025 relating to failure to furnish return of income in search cases and failure to produce
accounts and documents, respectively, with new sections.
It is proposed to substitute the said section 480 so as to decriminalize the offenses
thereunder to provide that if a person wilfully fails to furnish in due time the return of income,
setting forth his undisclosed income for the block period, which is required to be furnished
by notice given under section 294(1) (a), he shall be punishable––
(a) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where the amount of tax exceeds fifty lakh rupees;
(b) with simple imprisonment up to six months, or with fine, or with both, in a case
where the amount of tax, exceeds ten lakh rupees but does not exceed fifty lakh rupees;
(c) with fine, in any other case.
It is proposed to substitute the section 481 of the said so as to provide that –
(a) in the case where a person wilfully fails to produce, or cause to be produced, the
accounts and documents as are referred to in the notice served on him under section
268(1) on or before the date specified in such notice, this provision under section 481 is
proposed to be fully decriminalised.
(b) in the case where a person wilfully fails to comply with a direction issued to him
under section 268(5), the punishment is proposed to be changed from its current “rigorous
imprisonment for a term which may extend to one year and with fine” to simple
imprisonment for a term up to six months, or with fine, or with both.
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These amendments will take effect from 1st April, 2026.
Clause 101 of the Bill seeks to amend section 482 of the Income-tax Act, 2025 relating
to false statement in verification, etc.
The said section, inter alia, provides that if a person makes a statement in any
verification under this Act or under any rule made thereunder, or delivers an account or
statement which is false, and which he either knows or believes to be false, or does not
believe to be true, he shall be punishable,— (a) in a case, where the amount of tax, which
would have been evaded if the statement or account had been accepted as true, exceeds
twenty-five lakh rupees, with rigorous imprisonment for a term which shall not be less than
six months but which may extend to seven years, and with fine; (b) in any other case, with
rigorous imprisonment for a term which shall not be less than three months but which may
extend to two years, and with fine.
It is proposed to amend said section so as to change the punishment thereunder as below:
(a) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where the amount of tax, which would have been evaded if the statement or
account had been accepted as true, exceeds fifty lakh rupees;
(b) with simple imprisonment for a term up to six months, or with fine, or with both,
in a case where the amount of tax, which would have been evaded if the statement or
account had been accepted as true, exceeds ten lakh rupees but does not exceed fifty
lakh rupees;
(c) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 102 of the Bill seeks to amend section 483 of the Income-tax Act, 2025 relating
to falsification of books of account or document, etc.
Sub-section (1) of the said section,inter alia, provides that if any person (herein referred
to as the first person) wilfully and with intent to enable any other person (herein referred to
as the second person) to evade any tax or interest or penalty chargeable and imposable under
this Act, makes or causes to be made any entry or statement which is false and which the
first person either knows to be false or does not believe to be true, in any books of account
or other document relevant to or useful in any proceedings against the first person or the
second person, under this Act, the first person shall be punishable with rigorous
imprisonment for a term which shall not be less than three months but which may extend to
two years and with fine.
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It is proposed to amend the said sub-section to substitute “rigorous imprisonment for a
term which shall not be less than three months but which may extend to two years and with
fine” with “simple imprisonment for a term up to two years and shall also be liable to fine”.
This amendment will take effect from 1st April, 2026.
Clause 103 of the Bill seeks to amend section 484 of the Income-tax Act, 2025 relating
to abetment of false return, etc.
The said section,inter alia, provides that if a person abets or induces in any manner
another person–– (a) to make and deliver an account or a statement or declaration relating to
any income chargeable to tax which is false and which he either knows to be false or does
not believe to be true; or (b) to commit an offence under section 478(1), he shall be
punishable,— (i) in a case, where the amount of tax, penalty or interest which would have
been evaded, if the declaration, account or statement had been accepted as true, or which is
wilfully attempted to be evaded, exceeds twenty-five lakh rupees, with rigorous
imprisonment for a term which shall not be less than six months but which may extend to
seven years, and with fine; (ii) in any other case, with rigorous imprisonment for a term
which shall not be less than three months but which may extend to two years, and with fine.
It is proposed to amend the said section to change the punishment thereunder in the
manner given below:
(i) with simple imprisonment for a term up to two years, or with fine, or with both,
in a case where the amount of tax, penalty or interest which would have been evaded, if
the declaration, account or statement had been accepted as true, or which is wilfully
attempted to be evaded, exceeds fifty lakh rupees;
(ii) with simple imprisonment for a term up to six months, or with fine, or with both,
in a case where the amount of tax, penalty or interest which would have been evaded, if
the declaration, account or statement had been accepted as true, or which is wilfully
attempted to be evaded, exceeds ten lakh rupees but does not exceed fifty lakh rupees;
(iii) with fine, in any other case.
This amendment will take effect from 1st April, 2026.
Clause 104 of the Bill seeks to amend section 485 of the Income-tax Act, 2025 relating
to punishment for second and subsequent offences.
The said section, inter alia, provides that if any person convicted of an offence under
sections 476, 477, 478(1), 479, 480, 482 or 484 is again convicted of an offence under any
of the said sections, he shall be punishable for the second and for every subsequent offence
with rigorous imprisonment for a term which shall not be less than six months but which
may extend to seven years, and with fine.
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It is proposed to amend said section to substitute “rigorous imprisonment for a term which
shall not be less than six months but which may extend to seven years, and with fine” with
“simple imprisonment for a term which shall not be less than six months but which may
extend to three years and shall also be liable to fine”.
This amendment will take effect from 1st April, 2026.
Clause 105 of the Bill seeks to amend section 494 of the Income-tax Act, 2025 relating
to disclosure of particulars by public servants.
Sub-section (1) of the said section provides that a public servant, who furnishes any
information or produces any document in contravention of the provisions of section 258(3),
shall be punishable with imprisonment which may extend to six months, and shall also be
liable to fine.
It is proposed to amend the said section to substitute “imprisonment which may extend
to six months, and shall also be liable to fine” with “simple imprisonment up to one month,
or with fine, or with both”.
This amendment will take effect from 1st April, 2026.
Clause 106 of the Bill seeks to amend section 522 of the Income-tax Act, 2025 relating
to return of income, etc., not to be invalid on certain grounds.
The said section, inter alia, provides that no return of income, assessment, notice,
summons or other proceeding in pursuance of any of the provisions of the said Act shall be
invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission
in such return of income, assessment, notice, summons or other proceeding, if such return of
income, assessment, notice, summons or other proceeding is in substance and effect in
conformity with or according to the intent and purpose of the said Act.
It is proposed to insert sub-section (2) in the said section so as to provide that no
assessment in pursuance of any of the provisions of the Income-tax Act, 2025 shall be invalid
on the ground of any mistake, defect or omission in respect of quoting of a computer-
generated Document Identification Number, if the assessment order is referenced by such
number in any manner.
This amendment will take effect with effect from 1st April, 2026.
Clause 107 of the Bill seeks to amend section 536 of the Income-tax Act, 2025 relating
to repeal and savings.
The said section provides for the circumstances where deduction has been allowed under
the repealed Income-tax Act, 1961, but on violation of the conditions mentioned in the
respective sections of the said Act, it will become income after the enactment of the Income-
tax Act, 2025.
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It is proposed to substitute clause (h) of sub-section (2) of the said section so as to provide
that where any sum has been allowed as a deduction or has not been included in the total
income of any person, either on account of fulfillment of certain conditions or for any other
reason, for any tax year beginning before the 1st April, 2026, and such sum was required to
be included in the total income of any subsequent tax year including beginning on or after
the 1st April, 2026 under the repealed Income-tax Act, if it had not been so repealed, on
account of violation of such conditions or for any other reason, then such sum shall be––
(i) deemed to be the income of such subsequent tax year; and
(ii) included in the total income of the said person under the same head of income as it
would have been included under the repealed Income-tax Act.
It is further proposed to substitute sub-clauses (i) and (ii) of clause (l) of sub-section (2)
of the said section so as to include reference of section 206(3) or (4).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 108 of the Bill seeks to amend Schedule III to the Income-tax Act, 2025 relating
to income not to be included in total income of eligible persons.
It is proposed to amend the Table in the said Schedule so as to provide an express
statutory exemption in respect of disability pension, including both the service element and
the disability element, in cases where an individual has been invalided out of service on
account of such disability attributable to, or aggravated by, such service. However, the said
exemption shall not be available where the individual has retired from service on
superannuation or otherwise.
It is further proposed to amend the Table in the said Schedule so as to provide exemption
to an individual or his legal heir, on any interest awarded on compensation under the Motor
Vehicles Act, 1988.
It is proposed to amend the said Schedule so as to provide exemption on any income in
respect of any award or agreement made on account of compulsory acquisition of any land,
carried out on or after the 1st April, 2026 under the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (other than
the award or agreement made under section 46 of said Act).
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 109 of the Bill seeks to amend Schedule IV of the Income-tax Act, 2025 relating
to income not to be included in total income of eligible non-residents, foreign companies and
other such persons.
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Schedule IV to the said Act specifies the eligible income, which shall not be included
in the total income of the eligible non-residents, foreign companies and other such persons.
It is proposed to amend the said Schedule to provide exemption to a foreign company
on income arising on account of providing capital goods, equipment or tooling to a contract
manufacturer, being a company resident in India, who is located in a custom bonded area,
that is, a warehouse referred to in section 65 of the Customs Act, 1962 and produces
electronic goods on behalf of the foreign company for a consideration. The said exemption
shall be provided up to the tax year 2030-2031.
It is further proposed to amend the said Schedule so as to provide exemption to an
individual, being a non-resident for a period of five consecutive tax years immediately
preceding the tax year during which he visits India for the first time for rendering services in
India in connection with any scheme as may be notified by the Central Government, on any
income which accrues or arises outside India, and is not deemed to accrue or arise in India,
for five consecutive tax years commencing from the first tax year during which he visits
India, if such person renders any service in India in connection with any scheme as may be
notified by the Central Government and fulfils such other conditions, as may be provided by
rules.
It is also proposed to amend the said Schedule so as to provide exemption to a foreign
company, on any income accruing or arising in India or deemed to accrue or arise in India
by way of procuring data centre services from a specified data centre, for a period up to tax
year ending on 31st March, 2047, subject to the conditions specified therein.
It is also proposed to insert Note 3 so as to define the expressions “data centre”, “data
centre services” and “specified data centre” for the purposes of the said provision in serial
number 13C.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 110 of the Bill seeks to amend Schedule VI of the Income-tax Act, 2025 relating
to income not to be included in the total income of certain eligible persons in International
Financial Services Centre or having income therefrom.
Serial Numbers 1 to 4 of the Table in the said Schedule applies to any specified fund and
the expression “specified fund” has been defined in clause (g) of Note 1 of the said Schedule.
It is proposed to amend the said clause so as to align the definition of the expression
“specified fund” with the definition provided under clause (4D) of section 10 of the Income-
tax Act, 1961 and make a consequential amendment thereto.
These amendments will take effect from 1st April, 2026.
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Clause 111 of the Bill seeks to amend Schedule XI to the Income-tax Act, 2025 relating
to recognised provident funds.
It is proposed to amend the provisions of the said Schedule to align with the provisions
of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the
Employees’ Provident Fund Scheme, as follows: ––
(i) to align the treatment of employer contributions with the aggregate monetary cap
prescribed under section 17(1)(h) of the Income-tax Act, 2025, and the Employees’
Provident Fund framework;
(ii) to reflect that exemption from schemes under the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952 is governed by that Act;
(iii) to omit the discretionary relaxation of contribution parity based on salary
thresholds that are no longer relevant, in order to align the provision with the monetary
limit prescribed under section 17(1)(h) of the Income-tax Act, 2025;
(iv) to align the limits on employer contributions with the Employees’ Provident
Funds and Miscellaneous Provisions Act, 1952 and the absolute monetary ceiling
provided under section 17(1)(h) of the Income-tax Act, 2025;
(v) to remove the applicable limits for employee-shareholders as no such limit exists
in the Employees’ Provident Fund framework and to align it with the uniform cap
prescribed under section 17(1)(h) of the Income-tax Act, 2025; and
(vi) to amend the provisions which restrict investment in Government securities, to
align the Schedule with prevailing Employees’ Provident Fund investment norms.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clause 112 of the Bill seeks to amend Schedule XII to the Income-tax Act, 2025.
Part A of the said Schedule provides for the list of minerals or group of minerals
eligible for deduction on deferred basis for prospecting, or extraction or production or
development of a mine or other natural deposit of the specified minerals.
It is proposed to amend the said Part so as to incentivise the prospecting and exploration
of the critical minerals by expanding the list of minerals to make the expenditure on such
prospecting and exploring of critical minerals also eligible for deduction as per the provisions
of section 51 of the said Act.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
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Clause 113 of the Bill seeks to amend Schedule XIV to the Income-tax Act, 2025 relating
to insurance business.
It is proposed to consequentially amend clause (a) of sub-paragraph (1) of the said
Schedule so as to substitute the words “this rule” with the words “this paragraph”.
It is further proposed to amend the said Schedule so as to insert sub-paragraph (3) in
paragraph 4 to provide that the amount not deductible under sub-clause (i) or (ii) of section
35(b), which is added under sub-paragraph (1)(a), shall be allowed subsequently as a
deduction in a tax year as per the provisions of the said sub-clause, as the case may be.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in
relation to the tax year 2026-2027 and subsequent years.
Clauses 114 to 128 of the Bill seeks to insert a new Chapter relating to the Foreign Assets
of Small Taxpayers Disclosure Scheme, 2026.
The Chapter, inter alia, provides––
(a) the short title and commencement of the Scheme and the date from which it shall
come into force;
(b) the definitions of certain expressions relating to “assessee”, “assessment”,
“assessment year”, “Board”, “declarant”, “declaration”, “last date”, “previous year”
“prescribed” “undisclosed asset located outside India”, “undisclosed foreign income” and
“value of the asset”;
(c) the provisions relating to eligibility and filing of declaration by an assessee in respect
of undisclosed foreign income or undisclosed assets located outside India;
(d) the provisions relating to the amount payable by the declarant, including the rate of
tax, penalty or fee payable, subject to specified monetary thresholds and conditions;
(e) the provisions relating to the manner, form and verification of the declaration and the
circumstances in which such declaration shall be deemed invalid;
(f) the provisions relating to electronic verification of declarations, determination of the
amount payable, time limits for payment, levy of interest for delayed payment and issuance
of certificate evidencing payment;
(g) the provisions relating to non-inclusion of income or assets declared under the
Scheme in the total income of the declarant and the effect of such declaration on pending
assessment proceedings;
(h) the provisions relating to non-refund of any amount paid under the Scheme and the
bar on claiming rectification, revision, set-off or relief in respect of completed assessments;
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(i) the provisions relating to grant of immunity from levy of tax, penalty and prosecution
under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax
Act, 2015, subject to fulfilment of the conditions of the Scheme;
(j) the provisions relating to cases to which the Scheme shall not apply, including cases
involving proceeds of crime or completed assessments under the Prevention of Money-
laundering Act, 2002 and the Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015;
(k) the provisions relating to the power of the Central Board of Direct Taxes to issue
directions and grant relaxation in public interest, the power of the Central Government to
remove difficulties and the power to make rules for carrying out the provisions of the
Scheme.
This Chapter will take effect from such date as the Central Government may notify in the
Official Gazette.
Indirect taxes
Clause 129 of the Bill seeks to amend sub-section (2) of section 1 of the Customs
Act, so as to extend the jurisdiction of the said Act beyond the territorial waters of India for
the purpose of fishing and fishing related activities.
Clause 130 of the Bill seeks to insert a new clause in section 2 of the Customs Act,
so as to define the expression “Indian-flagged fishing vessel”.
Clause 131 of the Bill seeks to amend sub-section (6) of section 28 of the Customs Act
to provide that the penalty paid under sub-section (5) of section 28, on determination under
the said sub-section, shall be deemed to be a charge for non-payment of duty under clause
(i) thereof.
Clause 132 seeks to amend sub-section (2) of section 28J of the Customs Act so as to
provide that advance ruling under sub-section (1) of that section shall remain valid for a
period of five years or till there is a change in law or facts on the basis of which the advance
ruling has been pronounced, whichever is earlier.
It further seeks to substitute the proviso to the said sub-section so as to provide that in
respect of any advance ruling in force on the date on which the Finance Bill, 2026 receives
the assent of the President, the Authority shall upon a request by the applicant, extend the
validity for five years from the date of the ruling.
Clause 133 of the Bill seeks to insert a new section 56A in the Customs Act so as to
make special provisions for fishing and fishing related activities by an Indian-flagged fishing
vessel beyond territorial waters of India. It seeks to provide that fish harvested beyond the
territorial waters of India may be brought into India free of duty and to treat fish that has
landed at foreign port as export of goods in such manner as may be provided by rules. It
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further seeks to make regulations to provide for the form and manner of making an entry in
respect of fish harvested by an Indian-flagged fishing vessel including its declaration,
custody, examination, assessment of duty, clearance, transit or transhipment.
Clause 134 of the Bill seeks to substitute section 67 of the Customs Act, relating to
removal of goods from one warehouse to another.
The proposed section seeks to do away with the requirement of prior permission of
the proper officer under the said section for removal of warehoused goods from one
warehouse to another.
Clause 135 of the Bill seeks to amend clause (b) of section 84 of the Customs Act,
so as to empower the Board to make regulations for the custody of goods imported or to be
exported by post or courier.
Customs tariff
Clause 136 of the Bill seeks to amend the First Schedule to the Customs Tariff Act
in the manner specified in,–
(a) the Second Schedule with a view to impose a composite duty on certain goods;
(b) the Third Schedule so as to revise the rates in respect of certain tariff items with
effect from the 1st April, 2026;
(c) the Fourth Schedule, so as to create new tariff entries and the Fifth Schedule, so
as to revise the rates in respect of certain tariff items, with effect from the 1st of May, 2026.
Central Goods and Services Tax
Clause 137 of the Bill seeks to amend sub-section (3) of section 15 of the Central
Goods and Services Tax Act to do away with requirement of linking the post-sale discount
with an agreement specifically linked to relevant invoices and to refer to issuance of credit
note under section 34 where the input tax credit is reversed by the recipient.
Clause 138 of the Bill seeks to amend section 34 of the Central Goods and Services
Tax Act so as to include the reference of discount referred under clause (b) of sub-section
(3) of section 15 in the said section for issuing credit notes for post-supply discounts.
Clause 139 of the Bill seeks to amend sub-section (6) of section 54 of the Central
Goods and Services Tax Act to extend the provisions of provisional refund to refunds arising
out of inverted duty structure.
The clause further seeks to amend sub-section (14) of section 54 of the Central Goods
and Services Tax Act to provide for removing the threshold limit for refund claim in case of
goods exported out of India with payment of tax.
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Clause 140 of the Bill seeks to insert a new sub-section (1A) in section 101A of the
Central Goods and Services Tax Act so as to provide that till the National Appellate
Authority is constituted under sub-section (1), the Government may on the recommendation
of the Council, by notification, empower any existing Authority to hear appeals made under
section 101B.
It further seeks to provide that in such case, the provisions of sub-sections (2) to (13)
shall not apply.
It also seeks to insert an Explanation in the said sub-section so as to provide that the
expression “existing Authority” shall include a Tribunal.
Integrated Goods and Services Tax
Clause 141 of the Bill seeks to omit clause (b) of sub-section (8) of section 13 of the
Integrated Goods and Services Tax Act, 2017 so as to provide that the place of supply for
“intermediary services” shall be determined as per the provisions of sub-section (2) of section
13 of the said Act, which is the location of the recipient of such services.
MISCELLANEOUS
Clause 142 seeks to amend the Seventh Schedule to the Finance Act, 2001 in the
manner specified in the Sixth Schedule with effect from 1st May, 2026 so as to revise the
National Calamity Contingent Duty rate on chewing tobacco, jarda scented tobacco and other
(including gutkha).
Clause 143 of the Bill seeks to amend section 98 of the Finance (No.2) Act, 2004
relating to charge of securities transaction tax.
The said section, inter alia, provides that the securities transaction tax on sale of––
(i) an option in securities is 0.1 per cent. of the option premium;
(ii) an option in securities when such option is exercised is 0.125 per cent. of the
intrinsic price; and
(iii) a futures in securities is 0.02 per cent. of the price at which “futures” are traded.
It is proposed to amend the said section so as to increase the said rates from the existing
rate of securities transaction tax on sale of––
(i) an option in securities to 0.15 per cent. of the option premium;
(ii) an option in securities, where option is exercised to 0.15 per cent. of the intrinsic
price; and
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(iii) futures in securities to 0.05 per cent. of the price at which such “futures” are
traded.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply
in relation to the tax year 2026-2027 and subsequent years.
Clause 144 of the Bill seeks to amend sections 49 and 50 of the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 relating to the
punishment for failure to furnish return in relation to foreign income and asset and
punishment for failure to furnish in return of income, any information about an asset
(including financial interest in any entity) located outside India, respectively.
The said section provides for prosecution where a resident, other than not ordinarily
resident in India, holding foreign assets or income wilfully fails to furnish the return of
income or fails to disclose such information in their return of income.
It is proposed to amend the said sections to insert proviso in both the sections so as
to provide that the provisions of the said sections shall not apply in respect of an asset or
assets (other than immovable property) where the aggregate value of such asset or assets
does not exceed twenty lakh rupees, to make it harmonious with the threshold specified in
sections 42 and 43 of the said Act.
These amendments will take effect retrospectively from 1st October, 2024.
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MEMORANDUM REGARDING DELEGATED LEGISLATION
The provisions of the Bill, inter alia, empower the Central
Government to issue notifications and the Board to make rules for various
purposes as specified therein.
Clause 15 of the Bill seeks to amend section 270AA of the Income-
tax Act, 1961 relating to immunity from imposition of penalty, etc. Sub-
section (2) of the said section empowers the Board to provide by rules the
form for application to grant immunity and the manner of verification of
such application.
Clause 69 of the Bill seeks to amend section 352 of the Income-tax
Act, 2025 relating to tax on accreted income. It is proposed to substitute
serial number 8 and the entries relating thereto of the Table in sub-section
(4) of the said section so as to empower the Board to provide by rules for
the conditions for merger for the purposes of the said section.
Clause 70 of the Bill seeks to insert a new section 354A in the
Income-tax Act, 2025 relating to merger of registered non-profit
organisations in certain cases. The said section empowers the Board to
provide by rules for the conditions of merger for the purposes of said the
section.
Clause 74 of the Bill seeks to amend section 395 of the Income-tax
Act, 2025 relating to certificates. Sub-section (6) of the said section
empowers the Board to provide by rules for the conditions for filing
application to the prescribed income-tax authority.
Clause 85 of the Bill seeks to amend section 440 of the Income-tax
Act, 2025 relating to immunity from imposition of penalty, etc. Sub-
section (2) of the said section empowers the Board to provide by rules the
form and the manner of verification of application for grant of waiver of
penalty and immunity from initiation of proceeding for prosecution.
Clause 109 of the Bill seeks to amend Schedule IV of the Income-tax
Act, 2025 relating to income not to be included in total income of eligible
non-residents, foreign companies and other such persons. It is proposed
to amend the said Schedule so as to empower the Board to provide by
rules for the conditions to be fulfilled by person rendering any service in
India in connection with any scheme.
Clause 110 of the Bill seeks to amend Schedule VI of the Income-tax
Act, 2025 relating to income not to be included in the total income of
certain eligible persons in International Financial Services Centre or
having income therefrom. Sub-item (II) of item C of the said Schedule
empowers the Board to provide by rules for the conditions for holding of
number of units.
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Clauses 114 to 128 of the Bill seeks to insert a new Chapter relating
to the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026.
Clause 128 empowers the Board to make rules for carrying out the
provisions of the said Scheme.
Indirect taxes
Clause 133 of the Bill seeks to insert a new section 56A in the
Customs Act. Sub-section (1) of the said section 56A empowers the
Central Government to make rules to provide for the manner and the
conditions subject to which the fish harvested by an Indian-flagged
fishing vessel beyond territorial waters of India may be brought into India
free of duty and the fish that has landed at a foreign port may be treated
as export of goods. Sub-section (2) of the said section empowers the
Central Board of Indirect Taxes and Customs to make regulations to
provide for the form and manner of making an entry in respect of fish
harvested including its declaration, custody, examination, assessment of
duty, clearance, transit or transhipment.
Clause 135 of the Bill seeks to amend clause (b) of section 84 of
the Customs Act, so as to empower the Board to make regulations for the
custody of goods imported or to be exported by post or courier.
2. The matters in respect of which rules or regulations may be made
are matters of procedure and details and it is not practicable to provide for
them in the Bill itself.
3. The delegation of legislative powers is, therefore, of a normal
character.
LOK SABHA
_________________________
A
BILL
to give effect to the financial proposals of the Central Government
for the financial year 2026-2027.
_________________________
(Smt. Nirmala Sitharaman,
Minister of Finance.)
