The Income Tax Bill 2025 revises the scope of total income under ...

Income Tax Bill Updates Section 5: Restructures Residency Rules and Foreign Income Treatment While Maintaining Core Framework

February 25, 2025

Notes     Bill

The Income Tax Bill 2025 revises the scope of total income under existing Sec. 5 of ITA 1961, maintaining core taxation principles while introducing structural refinements. Key modifications include replacing "previous year" with "tax year", repositioning "not ordinarily resident" provisions from proviso to main clause 5(1)(c), and elevating explanatory notes to primary subsections. The Bill retains fundamental frameworks for resident and non-resident taxation but enhances clarity through improved language and organization. Notable changes include clearer articulation of double taxation prevention [Sec 5(4)] and foreign income treatment [Sec 5(3)]. These amendments aim to streamline tax administration, reduce litigation potential, and align with international taxation standards while preserving the established scope of taxable income in India.

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