Capital Gains Tax Exemptions: Clause 70 of the Income Tax Bill 2025 vs. Section 47 of the Income Tax Act 1961

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..... t with the corresponding provisions in Section 47, highlighting similarities, differences, and implications. Objective and Purpose Clause 70 of the Income Tax Bill, 2025 aims to provide clarity and continuity regarding transactions that do not qualify as transfers for capital gains purposes. The legislative intent is to ensure that certain transactions, typically involving restructuring, amalgamations, and reorganizations, do not incur capital gains tax, thereby facilitating business operations and corporate restructuring without additional tax burdens. This aligns with policy considerations that encourage economic growth and corporate efficiency. Detailed Analysis 1. Partition of Hindu Undivided Family (HUF) Clause 70(1)(a) specifies .....

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..... 70(1)(n)-(o) addresses transfers in business reorganizations involving cooperative banks, akin to Section 47(vica)-(vicb). The provisions ensure tax neutrality in banking sector consolidations. 7. Non-Resident Transactions Clause 70(1)(p)-(s) pertains to transfers by non-residents, including bonds and securities transactions. These provisions are consistent with Section 47(viia)-(viib), facilitating international financial transactions. 8. Infrastructure and Public Sector Transfers Clause 70(1)(v)-(w) includes transfers by public sector companies and infrastructure finance institutions, similar to Section 47(viiae)-(viiaf), promoting infrastructure development. 9. Conversion and Exchange Transactions Clause 70(1)(x)-(zb) covers conve .....

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..... s reorganizations. Comparative Analysis Clause 70 of the Income Tax Bill, 2025 largely mirrors Section 47 of the Income Tax Act, 1961, with some modernizations and expansions to accommodate contemporary business practices and international transactions. The 2025 Bill provides a more detailed framework for foreign company amalgamations and demergers, reflecting global business trends. Both provisions aim to maintain tax neutrality in specific transactions, supporting economic stability and growth. Conclusion Clause 70 of the Income Tax Bill, 2025, and Section 47 of the Income Tax Act, 1961, serve as crucial mechanisms for exempting certain transactions from capital gains tax. While the provisions are largely consistent, the 2025 Bill int .....

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