The unique Earnings Tax Invoice, which was introduced in Parliament in February, had achieved away with this exemption and the ITR submitting flexibility for claiming TDS refunds.
Earnings Tax (No.2) Invoice has added the phrase “occupation” in clause 187 to allow professionals with whole receipts exceeding Rs 50 crore in a yr to have the power of prescribed digital modes of fee.
Moreover, the provisions associated to carrying ahead and setting off of losses have been re-drafted for improved presentation.
As regards the TDS correction statements, the time interval for submitting statements has been diminished to 2 years from six years within the Earnings Tax Act, 1961.
“That is anticipated to cut back the grievances of deductees considerably,” sources within the Central Board of Direct Taxes (CBDT) stated. Earnings Tax (No.2) Invoice, which is able to exchange the Earnings Tax Act, 1961, incorporates nearly all of the suggestions of the Choose Committee which submitted its report back to Parliament on July 21. The unique Earnings Tax Invoice, 2025, was launched within the Lok Sabha in February and was referred to the Committee. The Choose Committee had instructed restoration of the provisions of Earnings Tax 1961 with regard to taxation of donations to non-profit organisation (NPOs) or charitable trusts. With regard to NPOs, the federal government within the new invoice has exempted from tax nameless donations acquired by purely spiritual trusts. Nonetheless, such donations acquired by a spiritual belief which will additionally produce other charitable features, like working hospitals and academic establishments, shall be taxed as per legislation.
Clause 337 of the Earnings Tax Invoice, 2025, proposed a flat 30 per cent tax on nameless donations acquired by all registered NPOs, with a slender exemption prolonged solely to these established wholly for spiritual functions — a “important divergence” from the present I-T Act.
The Earnings-tax Act, 1961, offered a extra complete exemption: nameless donations weren't taxed if acquired by any belief or establishment created or established wholly for spiritual and charitable functions, until such a donation was specifically-directed in the direction of a college, instructional establishment, hospital, or medical establishment run by that very same belief or establishment.
CBDT sources stated, “Provisions regarding taxation of nameless donation (in Earnings tax(No.2) invoice) have been aligned with the present provisions of the Earnings-tax Act, 1961 and exemption has been made obtainable to blended object registered non-profits organisation additionally.”
One other level with regard to taxation of NPOs as flagged by the Committee was the proposal to tax ‘receipts' of NPOs. The Committee opposed taxing ‘receipts' because it contravenes the precept of actual earnings taxation beneath the Earnings Tax Act. It really useful reintroducing the time period ‘earnings' to make sure solely internet earnings of NPOs is taxed.
CBDT sources stated, “The idea of receipt has been modified with the idea of earnings as was there within the Earnings-tax Act, 1961”.
With regard to the refund of TDS claims by people who're in any other case not required to file tax returns, the committee instructed the elimination of the availability within the Earnings Tax Invoice that makes it necessary for an assessee to file I-T returns inside the due date.
The Earnings Tax (No.2) Invoice does away with the requirement and offers “flexibility” to people by permitting refund claims in instances the place the return shouldn't be filed in due time with the omission of Clause 263(1)(ix).
Additionally, the amendments made by the Taxation Legal guidelines (Modification) Invoice, 2025, which was handed by the Lok Sabha on Monday, have additionally been made a part of the brand new earnings tax Invoice.
Accordingly, the brand new earnings tax invoice features a provision associated to tax exemptions for subscribers of the Unified Pension Scheme (UPS).
It additionally incorporates adjustments within the scheme of block evaluation with regard to Earnings Tax search instances, and offers for sure direct tax advantages to public funding funds of Saudi Arabia.
