Enhancing Fair Market Valuation in Clause 91 of Income Tax Bill, 2025 vs. Section 55A of Income Tax Act, 1961

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..... Valuation Officer to ascertain the fair market value of a capital asset. This clause is significant within the broader context of capital gains taxation, aiming to ensure that the valuation of assets aligns with market realities, thereby preventing tax evasion through underreporting. The provision is a continuation and modification of the existing Section 55A of the Income-tax Act, 1961, which ha .....

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..... taxable amount of capital gains. The clause is also intended to provide clarity and uniformity in the valuation process, which is essential for both taxpayers and tax authorities. Detailed Analysis Key Provisions of Clause 91 Clause 91(1) outlines the circumstances under which the Assessing Officer may refer the valuation of a capital asset to a Valuation Officer. There are two primary scenari .....

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..... ry modifications, thereby ensuring consistency in the application of valuation procedures. Comparative Analysis with Section 55A of the Income-tax Act, 1961 Section 55A of the Income-tax Act, 1961, serves as the predecessor to Clause 91 and shares similar objectives in ascertaining the fair market value of capital assets. However, there are notable differences and enhancements in the 2025 Bill: .....

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..... ns and market dynamics. 4. Legislative Intent and Clarity:- Clause 91 appears to provide clearer legislative intent and structured guidance on when and how valuation references should be made, which might address some of the interpretational challenges faced u/s 55A. Practical Implications The introduction of Clause 91 has several practical implications for stakeholders: 1. For Taxpayers:- Tax .....

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..... use 91 of the Income Tax Bill, 2025, represents a significant step in refining the process of asset valuation for tax purposes. By addressing potential discrepancies in asset valuations, the provision aims to enhance the fairness and accuracy of capital gains taxation. The clause builds on the foundation established by Section 55A of the Income-tax Act, 1961, while introducing improvements in clar .....

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