Why in the News?
Parliament has passed the Income-tax Bill, 2025, replacing the 1961 law with a leaner, simpler version free of redundant provisions and archaic language, effective April 1, 2026.
About New Income Tax Bill, 2025:
- Purpose: Replaces the Income Tax Act, 1961 after more than 60 years to simplify the law, remove redundant provisions, and modernise tax administration.
- Effective Date: Comes into effect from April 1, 2026.
- Structural Changes: Sections reduced from 819 to 536; chapters from 47 to 23.
- Conciseness: Word count cut from 5.12 lakh to 2.6 lakh, with 39 tables and 40 formulas for clarity.
- New Concept: Introduces “tax year” defined as April 1 to March 31.
Key Features:
- Refunds: Restores refund claims on belated returns by removing the earlier restriction.
- Tax Collected at Source (TCS) Clarity: Nil TCS for Liberalised Remittance Scheme (LRS) remittances for education funded by financial institutions.
- Corporate Tax: Corrects errors in inter-corporate dividend deduction for companies opting for concessional tax rates.
- Alternate Minimum Tax (AMT) Alignment: Aligns AMT provisions for Limited Liability Partnerships (LLPs) with existing rates.
- Nil-Tax Deducted at Source (TDS) Certificate: Permits taxpayers with no liability to obtain a nil-TDS certificate.
- Transfer Pricing: Clarifies transfer pricing provisions, set-off of losses, and alignment with Section 79 on “beneficial owner.”
- Non-Profit Organisation (NPO) Benefit: Expands exemption to 5% of total donations, instead of only anonymous donations.
- House Property Income: Clarifies 30% standard deduction after municipal taxes.
- Search Definition: Retains “virtual digital space” definition to include cloud storage, email, and social media accounts.
- Data Handling: Standard Operating Procedure (SOP) to be issued for handling personal digital data seized in searches.
| [UPSC 2025] Consider the following statements: Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax. Statement II: In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961.
Which one of the following is correct in respect of the above statements? (a) Both Statement I and Statement II are correct and Statement II explains Statement I (b) Both Statement I and Statement II are correct but Statement II does not explain Statement I* (c) Statement I is correct but Statement II is not correct (d) Statement I is not correct but Statement II is correct |
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