Head Office Expenditure Deductions - Reforming Non-Resident Tax Deductions: Clause 60 of Income Tax Bill, 2025 vs. Section 44C of the Income-tax Act, 1961

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..... roduction Clause 60 of the Income Tax Bill, 2025, addresses the deduction of head office expenditure for non-resident assessees. This provision is critical as it outlines the manner in which such deductions are computed for income chargeable under "Profits and gains of business or profession." This clause is a continuation of the legislative framework established by Section 44C of the Income-tax .....

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..... 60 Clause 60(1) establishes the foundational rule that deductions for head office expenditures are permissible, notwithstanding contrary provisions in sections 26 to 54. The clause stipulates that such deductions are subject to the conditions outlined in sub-section (2). Sub-section (2) Limitations The allowable deduction is capped at 5% of the adjusted total income or average adjusted total i .....

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..... ns to avoid penalties and ensure optimal tax planning. Comparative Analysis with Section 44C of the Income-tax Act, 1961 Structural and Substantive Differences Both Clause 60 and Section 44C address the same subject matter but differ in their structural approach. Section 44C offers a more restrictive framework, allowing deductions only up to the least of three specified amounts. Clause 60 simpl .....

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..... Income Tax Bill, 2025, represents a significant evolution in the taxation of non-resident businesses in India. By providing clear guidelines and simplifying the deduction process, it aims to foster a more equitable and efficient tax system. The comparative analysis with Section 44C highlights the legislative intent to modernize and streamline tax provisions, ensuring they are relevant and effecti .....

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