A Comparative Analysis of "Profits in Lieu of Salary" Under the New Tax Regime: Clause 18 of Income Tax Bill, 2025 vis-a-vis Section 17(3) of Income-tax Act, 1961.

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..... hanges to the definition and scope of "profits in lieu of salary" through Clause 18, which aims to replace the existing Section 17(3) of the Income-tax Act, 1961. This analysis examines the key modifications and their implications. 2. Structural Changes 2.1 Organization and Format The new Clause 18 presents a more organized structure with clear subsections and categorization. The provision .....

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..... ins similar coverage but with improved structure * Specifically addresses lump-sum payments * Provides clearer distinction between pre and post-employment payments 3.3 Payments from Employer and Funds Original [Section 17(3)(ii)]: * Complex structure with multiple cross-references to Section 10 * Included Keyman insurance policy provisions within the main clause New [Clause 18(1)(c)]: .....

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..... titutes profits in lieu of salary * Easier identification of taxable and non-taxable components * Simplified reference system through schedules 5.2 For Employers * Better guidance for classification of payments * Reduced complexity in determining taxable components * Clearer framework for compliance 6. Conclusion Clause 18 represents a significant improvement in terms of clarity, stru .....

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