THE INCOME-TAX BILL, 2025

This Bill proposes a comprehensive framework for assessing and collecting income tax in India, defining how different types of income (such as salaries, business profits, and capital gains) are calculated and taxed. It establishes rules for deductions, rebates, and anti-avoidance measures to determine the final tax liability for individuals and entities.

The Bill applies to individuals, companies, firms, and other entities who are residents in India or have income deemed to accrue or arise in India. It specifically mentions provisions for political parties, electoral trusts, non-residents, co-operative banks, and persons governed by the Portuguese Civil Code.

• Defines the scope of total income and residence in India.
• Establishes heads of income including salaries, house property, business/profession, capital gains, and other sources.
• Specifies deductions for items like life insurance, health insurance, education loans, home loans, electric vehicle purchases, and donations.
• Includes provisions for set-off and carry forward of losses under various heads of income.
• Introduces rules for transfer pricing and arm's length pricing for international and specified domestic transactions.
• Establishes a General Anti-Avoidance Rule (GAAR) to tax impermissible avoidance arrangements.
• Regulates modes of payment for certain loans, deposits, and transactions, including requirements for electronic modes.
• Provides for rebates and reliefs, including double taxation relief based on agreements with foreign countries.
• Includes special provisions for taxation of capital gains, including exemptions for specific investments and transfers.

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