The Taxation Laws (Amendment) Bill, 2025 |The LexSphere Library

SECTION Section 1

Untitled Section

•43 of 1961.

•5

•AS INTRODUCED IN LOK SABHA

•Bill No. 105 of 2025

•THE TAXATION LAWS (AMENDMENT) BILL, 2025

•A

•BILL

•further to amend the Income-tax Act, 1961 and to amend the Finance Act, 2025.

•BE it enacted by Parliament in the Seventy-sixth Year of the Republic of

•India as follows:—

SECTION Section 10

Untitled Section

3.In the Income-tax Act, in section 16, in clause (ia), in the proviso, after the

•word, brackets and figures “clause (ii)”, the words, brackets and figures “or clause

•(iii)” shall be inserted and shall be deemed to have been inserted with effect from

•the 1st day of April, 2025.

SECTION Section 11

Untitled Section

4.In the Income -tax Act, in section 80CCD, with eff ect from the 1st day of

•April, 2025,—

(a)after sub-section (3), the following sub-section shall be inserted and

•shall be deemed to have been inserted, namely:—

•“(3A) Where any amount standing to the credit of the assessee,

•being a subscriber to the Unifie d Pension Scheme, in his account

•referred to in sub-section (1) or sub-section (1B), in respect of which a

•deduction has been allowed under those sub-sections or sub-section (2),

•together with the amount accrued thereon, if any, is received by the

•assessee or his nominee, in whole or in part, in any previous year on

•account of his superannuation or voluntary retirement or retirement

•under clause (j) of rule 56 of the Fundamental Rules [which is not treated

•as penalty under the Central Civil Services (Classification, Control and

•Appeal) Rules, 1965 ], as may be applicable, the whole of the amount

•shall be deemed to be the income of the assessee or his nominee, as the

•case may be, in the previous year in which such amount is received, and

•shall accordingly be charged to tax as income of that previous year.”;

(b)after sub-section (5), the following sub-section shall be inserted and

•shall be deemed to have been inserted, namely:—

•“(6) For the purposes of sub -section (3A), the assessee shall be

•deemed not to have received any amount in the previous year if such amount

•is transferred to pool corpus from individual corpus on account of his

•superannuation or voluntary retirement or retirement under clause (j) of rule

•56 of the Fundamental Rules [which is not treated as penalty under the

•Central Civil Services (Classification, Control and Appeal) Rules, 1965], as

•may be applicable.”;

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•20

•25

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•7 of 2025.

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(c)for the Explanation, the following Explanation shall be substituted

•and shall be deemed to have been substituted, namely:—

•‘Explanation.—For the purposes of this section,—

(i)“pool corpus” and “individual corpus” shall have the same

•meanings as assigned to them in notification number FX-1/3/2024-PR,

•dated the 24th January, 2025, of the Department of Financial

•Services;

•(ii) “salary” includes dearness allowance, if the terms of

•employment so provide, but excludes all other allowances and

perquisites.’.

SECTION Section 12

Untitled Section

•CHAPTER III

•AMENDMENT IN THE FINANCE ACT, 2025

SECTION Section 13

Untitled Section

5.In section 49 of the Finance Act, 2025, after clause (b), the following clause

•shall be inserted and shall be deemed to have been inserted with effect from

•the 1st day of September, 2024, namely:––

•‘(ba) for sub-section (2), the following sub-section shall be substituted,

•namely:––

•“(2) (a) The assessment or reassessment or recomputation under

•the provisions of this Act (other than this Chapter), if any, pertaining to

•any assessment year falling in the block period, pending on the date of

•initiation of the search under section 132, or making of requisition under

SECTION Section 14

Untitled Section

•section 132A, as the case may be, shall abate and shall be deemed to

•have been abated on the date of initiation of search or making of

requisition.

(b)Any proceedin g for assessment or reassessment or

•recomputation under any provision of this Act (other than this Chapter)

•pertaining to any assessment year falling in the block period (other than

•the assessment year in which the last of the authorisations for a search is

•executed or requisition is made), for which a notice has been issued

•during the period commencing on the date of initiation of search under

SECTION Section 15

Untitled Section

•section 132 or making of requisition under section 132A and ending on

•the date of making of order under clause (c) of sub-section (1) of section

•158BC, shall abate and shall be deemed to have been abated on the date

•of issue of such notice.’.

•Amendment of

SECTION Section 16

Untitled Section

•section 49.

•4

•STATEMENT OF OBJECTS AND REASONS

•The Government of India has reached an understanding with the Government

•of Saudi Arabia to provide for certain direct tax benefits through the Income -tax

Act.In addition, Unified Pension Scheme has been rolled out in the year 2025 and

•certain exemptions from Income-tax are required to be provided in respect of certain

•payouts to its subscribers. Also, it is required to provide for some changes in the

•scheme of Block assessment of search cases for its correct application.

SECTION Section 17

Untitled Section

2.Accordingly, the Taxation Laws (Amendment) Bill, 2025 has been prepared

•to give effect to the above decisions by way of amendment to the Income -tax

•Act, 1961 and the Finance Act, 2025.

•NIRMALA SITHARAMAN.

•_________

•PRESIDENT’S RECOMMENDATION UNDER ARTICLE 117 AND 274 OF

•THE CONSTITUTION OF INDIA

•_________

•[Letter No. 370152/37/2025-TPL dated 08.08.2025 from

Smt.Nirmala Sitharaman, Minister of Finance and Corporate Affairs to the

•Secretary General, Lok Sabha]

•The President, having been informed of the subject matter of the Taxation

•Laws (Amendment) Bill, 2025, 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 Taxation Laws (Amendment) Bill, 2025 in Lok Sabha and also recommends to

•Lok Sabha the consideration of the Bill.

•_________

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•NEW DELHI;

•The 10th August, 2025.

•5

•FINANCIAL MEMORANDUM

•This Bill seeks to amend the Income-tax Act, 1961 and Finance Act, 2025 so

•that no additional expenditure of significance, apart from what is being spent on the

•administration of the said Act, is contemplated by reason merely of passing of this

Bill.

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•Incomes not

•included in total

income.

•ANNEXURE

•EXTRACTS FROM THE INCOME-TAX ACT, 1961

•(43 OF 1961)

•* * * * *

SECTION Section 18

Untitled Section

•CHAPTER III

•INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

SECTION Section 19

Untitled Section

10.In computing the total income of a previous year of any person, any income

•falling within any of the following clauses shall not be included—

•* * * * *

•(23FE) any income of a specified person in the nature of dividend,

•interest, any sum referred to in clause (xii) of sub-section (2) of section 56 or

•long-term capital gains (whether or not such capital gains are deemed as short-

•term capital gains under section 50AA) arising from an investment made by it

•in India, whether in the form of debt or share capital or unit, if the

•investment—

(i)is made on or after the 1st day of April, 2020 but on or before

•the 31st day of March, 2030;

•(ii) is held for at least three years; and

•(iii) is in—

(a)a business trust referred to in sub -clause ( i) of clause

•(13A) of section 2; or

(b)a company or enterprise or an entity carrying on the

•business of developing, or operating and maintaining, or

•developing, operating and maintaining any infrastructure facility

•as defined in the Explanation to clause ( i) of sub -section (4) of

SECTION Section 2

Untitled Section

•CHAPTER I

•PRELIMINARY

SECTION Section 20

Untitled Section

•section 80-IA or such other business as the Central Government

•may, by notification in the Official Gazette, specify in this behalf;

•or

(c)a Category-I or Category-II Alternative Investment Fund

•regulated under the Securities and Exchange Board of India

•(Alternative Investment Funds) Regulations, 2012, made under the

•Securities and Exchange Board of India Act, 1992 (15 of 1992),

•having not less than fifty per cent investment in one or more of the

•company or enterprise or entity referred to in item ( b) or item (d)

•or item (e) or in a n Infrastructure Investment Trust referred to in

•sub-clause (i) of clause (13A) of section 2; or

(d)a domestic company, set up and registered on or after the

•1st day of April, 2021, having minimum seventy -five per cent

•investments in one or more of the co mpanies or enterprises or

•entities referred to in item (b); or

(e)a non -banking financial company registered as an

•Infrastructure Finance Company as referred to in notification

•number RBI/2009-10/316 issued by the Reserve Bank of India or

•in an Infra structure Debt Fund, a non -banking finance company,

•as referred to in the Infrastructure Debt Fund - Non-Banking

•Financial Companies (Reserve Bank) Directions, 2011, issued by

•the Reserve Bank of India, having minimum ninety per cent

•lending to one or more of the companies or enterprises or entities

•referred to in item (b):

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•Provided that if any difficulty arises regarding interpretation or

•implementation of the provisions of this clause, the Board may, with the

•approval of the Central Government, issue guidelines for the purpose of

•removing the difficulty:

•Provided further that every guideline issued under the first proviso, shall

•be laid before each House of Parliament and shall be binding on the income -

•tax authority and the specified person:

•Provided also that where any income has not been included in the total

•income of the specified person due to the provisions of this clause, and

•subsequently during any previous year the specified person fails to satisfy any

•of the conditions of thi s clause so that the said income would not have been

•eligible for such non -inclusion, such income shall be chargeable to income -

•tax as the income of the specified person of that previous year:

•Provided also that in case a Category -I or Category -II Alternat ive

•Investment Fund referred to in item ( c) of sub-clause (iii) has investment of

•less than one hundred per cent in one or more of the companies or enterprises

•or entities referred to in item (b) or item (d) or item (e) of the said sub-clause

•or in an Infr astructure Investment Trust referred to in item ( c) of the said

•sub-clause, income accrued or arisen or received or attributable to such

•investment, directly or indirectly, which is exempt under this clause shall be

•calculated proportionately to that investment made in one or more of the

•companies or enterprises or entities referred to in item ( b) or item ( d) or

•item ( e) of the said sub -clause or in the Infrastructure Investment Trust

•referred to in item ( c) of the said sub -clause, in such manne r as may be

•prescribed:

•Provided also that in case a domestic company referred to in item (d) of

•sub-clause (iii) has investment of less than one hundred per cent in one or more

•of the companies or enterprises or entities referred to in item ( b) of the sai d

•sub-clause, income accrued or arisen or received or attributable to such

•investments, directly or indirectly, which is exempt under this clause shall be

•calculated proportionately to the investment made in one or more of the

•companies or enterprises or e ntities referred to in item ( b) of the said

•sub-clause, in such manner as may be prescribed:

•Provided also that in case a non-banking finance company registered as

•an Infrastructure Finance Company or Infrastructure Debt Fund, referred to in

•item (e) of sub -clause (iii), has lending of less than one hundred per cent in

•one or more of the companies or enterprises or entities referred to in item ( b)

•of the said sub-clause, income accrued or arisen or received or attributable to

•such lending, directly or indirectly, which is exempt under this clause shall be

•calculated proportionately to the lending made in one or more of the

•companies or enterprises or entities referred to in item ( b) of the said

•sub-clause, in such manner as may be prescribed:

•Provided also that in case a sovereign wealth fund or pension fund has

•loans or borrowings, directly or indirectly, for the purposes of making

•investment in India, such fund shall be deemed to be not eligible for exemption

•under this clause.

•Explanation 1.—For the purposes of this clause, “specified person ”

•means—

(a)a wholly owned subsidiary of the Abu Dhabi Investment

•Authority which—

(i)is a resident of the United Arab Emirates; and

•(ii) makes investment, directly or indirectly, out of the fund

•owned by the Government of the Abu Dhabi;

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•Deductions from

salaries.

(b)a sovereign wealth fund which satisfies the following

•conditions, namely:—

(i)it is wholly owned and controlled, directly or indirectly,

•by the Government of a foreign country;

•(ii) it is set up and regulated under the law of such foreign

•country;

•(iii) the earnings of the said fund are credited either to the

•account of the Government of that foreign country or to any other

•account designated by that Government so that no portion of the

•earnings inures any benefit to any private person;

•(iv) the asset of the said fund vests in the Government of such

•foreign country upon dissolution:

•Provided that the provisions of sub-clauses (iii) and (iv) shall

•not apply to any payment made to creditors or depositors for loan

•taken or borrowing for the purposes other than for making

•investment in India;

(v)it does not participate in the day to day operations of

•investee but the monitoring mechanism to protect the investment

•with the investee including the right to appoint directors or

•executive director shall not be considered as participation in the

•day to day operations of the investee; and

•(vi) it is specified by the Central Government, by notification

•in the Official Gazette, for this purpose and fulfils conditions

•specified in such notification;

(c)a pension fund, which—

(i)is created or established under the law of a foreign country

•including the laws made by any o f its political constituents being

•a province, State or local body, by whatever name called;

•(ii) is not liable to tax in such foreign country or if liable to

•tax, exemption from taxation for all its income has been provided

•by such foreign country;

•(iii) satisfies such other conditions as may be prescribed;

•(iiia) it does not participate in the day to day operations of

•investee but the monitoring mechanism to protect the investment

•with the investee including the right to appoint directors or

•executive director shall not be considered as participation in day

•to day operations of the investee; and

•(iv) is specified by the Central Government, by notification in the

•Official Gazette, for this purpose and fulfils conditions specified in such

notification.

•* * * * *

SECTION Section 21

Untitled Section

16.The income chargeable under the head “Salaries” shall be computed after

•making the following deductions, namely:—

•* * * * *

•(ia) a deduction of fifty thousand rupees or the amount of the salary,

•whichever is less:

•Provided that in a case where income-tax is computed under clause (ii)

•of sub-section (1A) of section 115BAC, the provisions of this clause shall have

•effect as if for the words “fifty thousand rupees ”, the words “seventy-five

•thousand rupees” had been substituted;

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•* * * * *

80CCD.(1) * * * *

•*

Explanation.—For the purposes of this section, “salary” includes dearness

•allowance, if the terms of employment so provide, but excludes all other allowances

•and perquisites.

•* * * * *

158BA.(1) * * * * *

(2)The total undisclosed income relating to the block period shall be charged

•to tax, at the rate specified in section 113, as income of the block period irrespective

•of the previous year or years to which such income relates and irrespective of the

•fact whether regular assessment for any one or more of the relevant assessment years

•is pending or not.

Explanation.—For the removal of doubts, it is hereby declared that—

(a)the assessment made under this Chapter shall be in addition to the

•regular assessment in respect of each previous year included in the block

•period;

(b)the total undisclos ed income relating to the block period shall not

•include the income assessed in any regular assessment as income of such block

•period;

(c)the income assessed in this Chapter shall not be included in the

•regular assessment of any previous year included in the block period.

•* * * * *

•EXTRACT FROM THE FINANCE ACT, 2025

•(7 OF 2025)

•* * * * *

SECTION Section 22

Untitled Section

49.In section 158BA of the Income-tax Act, with effect from the 1st day of

•September, 2024,—

(a)in the marginal heading, for the words "total income", the words

•“total undisclosed income” shall be substituted and shall be deemed to have

•been substituted;

(b)in sub-section (1), for the words “total income”, the words "total

•undisclosed income" shall be substituted and shall be deemed to have been

•substituted;

(c)in sub-section (4), for the word “pending”, the words "required to

•be made" shall be substituted and shall be deemed to have been substituted;

(d)in sub-section (5), for the words “the assessment or reassessment

•relating to any assessment year”, the words “the assessment or reassessment

•or recomputation or reference or order relating to any assessment year shall

•be substituted and shall be deemed to have been substituted;

(e)in sub-section (7), for the words “total income”, the words “total

•undisclosed income” shall be substituted and shall be deemed to have been

substituted.

•* * * * *

•Deduction in

•respect of

•contribution to

•pension scheme

•of Central

Government.

•Assessment of

•total undisclosed

•income as a

•result of search.

•Amendment of

SECTION Section 23

Untitled Section

•section 158BA.

•6

•LOK SABHA

•————

•A

•BILL

•further to amend the Income-tax Act, 1961 and to amend the Finance Act, 2025.

•————

•(Smt. Nirmala Sitharaman, Minister of Finance and Corporate Affairs)

SECTION Section 3

Untitled Section

1.This Act may be called the Taxation Laws (Amendment) Act, 2025.

SECTION Section 4

Untitled Section

•CHAPTER II

•AMENDMENTS IN THE INCOME-TAX ACT, 1961

SECTION Section 5

Untitled Section

2.In the Income -tax Act, 1961 (hereafter in this chapter referred to as the

•Income-tax Act), in section 10, with effect from the 1st day of April, 2025,—

•Short title.

•Amendment of

SECTION Section 6

Untitled Section

•section 10.

•2

•Amendment of

SECTION Section 7

Untitled Section

•section 16.

•Amendment of

SECTION Section 8

Untitled Section

•section 80CCD.

(a)after clause (12A), the following clauses shall be inserted and shall

•be deemed to have been inserted, namely:—

•“(12AA) any payment from the National Pension System Trust to an

•assessee, who is a subscriber to the Unified Pension Scheme, to the extent

•that it does not exceed sixty per cent. of the individual corpus, as specified

•in notification number FX-1/3/2024-PR, dated the 24th January, 2025 of the

•Department of Financial Services, made at the time of his superannuation

•or voluntary retirement or retirement under clause (j) of rule 56 of the

•Fundamental Rules [which is not treated as penalty under the Central Civil

•Services (Classification, Control and Appeal) Rules, 1965];

•(12AB) any sum received as lump sum amount as per clause (vi) of

•paragraph 2 of the notification number FX-1/3/2024-PR, dated the 24th

•January, 2025 of the Department of Financial Services, by an assessee

•being a subscriber to the Unified Pension Scheme;”;

(b)in clause ( 23FE), in Explanation 1, after clause ( c), the following

SECTION Section 9

Untitled Section

•clause shall be inserted and shall be deemed to have been inserted, namely:—

•“(d) ( i) the Public Investment Fund of the Government of the

•Kingdom of Saudi Arabia; and

•(ii) a wholly owned subsidiary of the Public Investment Fund of

•the Government of the Kingdom of Saudi Arabia, which—

(A)is a resident of Saudi Arabia; and

(B)makes investment, directly or indirectly, out of the fund

•owned by the said Government.”.