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TMI BlogComprehensive Guide to Understanding Deductions from Gross total income in Clause 122 of Income Tax Bill, 2025 Vs. Section 80A of Income Tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... foundational provision for deductions in the existing tax framework. Both these provisions play a crucial role in shaping the financial obligations of taxpayers by defining the scope and limitations of allowable deductions. Objective and Purpose The primary objective of Clause 122 in the Income Tax Bill, 2025, is to streamline and update the provisions concerning deductions from gross total income. The legislative intent behind this clause is to ensure clarity, reduce ambiguities, and enhance compliance among taxpayers. It aims to provide a comprehensive mechanism for deductions, ensuring that they do not exceed the gross total income and are claimed within stipulated timeframes and conditions. Section 80A of the Income Tax Act, 1961, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eporting by taxpayers. 5. Subsection (6) and (7): These subsections address the transfer pricing issues within an assessee's businesses. They mandate that transfers between businesses should be at market value, preventing tax avoidance through undervaluation or overvaluation of inter-business transactions. 6. Subsection (8) and (9): These provisions further emphasize the non-duplication of deductions, particularly concerning specified businesses and the computation of income for deduction purposes. They ensure that deductions are consistently applied and reflect the true income derived. 7. Subsection (10): Defines "gross total income" as per the Act, establishing a clear baseline for deductions. Section 80A of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appropriately and within the legal framework. The emphasis on market value for inter-business transactions necessitates careful valuation and documentation by businesses to avoid disputes with tax authorities. For tax consultants and advisors, these provisions demand a thorough understanding of the deduction framework and the ability to guide clients in optimizing their tax positions while remaining compliant. Regulatory authorities benefit from clearer guidelines, which aid in the efficient administration and enforcement of tax laws. Comparative Analysis While Clause 122 of the Income Tax Bill, 2025, and Section 80A of the Income Tax Act, 1961, share several similarities in their approach to deductions, the former introduces more stri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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