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Select Committee Raises 32 Key Issues in Income Tax Bill, 2025

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The Select Committee of the Lok Sabha has presented a comprehensive report on the Income Tax Bill, 2025, identifying 32 critical issues that could impact clarity and fairness in the proposed legislation. The extensive report, spanning 4,574 pages, was submitted on February 13, 2025, by Committee Chairperson Baijayant Panda. Introduced by Finance Minister Nirmala Sitharaman, the Income Tax Bill aims to replace the Income Tax Act of 1961 entirely.

The Committee’s examination of the draft legislation has highlighted numerous areas requiring improvement. It has raised alarms about vague definitions and inconsistencies that could burden both taxpayers and administrators.

Need for Simplification and Clarity

A significant focus of the report is the necessity for clearer definitions throughout the bill. The Committee has advocated for revising the definition of “capital asset” in Clause 2(22) to be more aligned with recent amendments in the Finance Act, particularly regarding securities held by foreign investors. Additionally, the concept of “infrastructure capital company” was criticized for its complexity, with the Committee suggesting that the definition of “infrastructure facility” be directly included in the bill for better self-containment.

Other definitions, including those for “micro” and “small” enterprises, “parent company,” and “co-operative bank,” were also scrutinized. The Committee urged a more precise articulation to prevent potential misinterpretation.

Enhancing Fairness in Deductions

The report outlines several recommendations aimed at improving the fairness of income computations and deductions. For instance, it calls for explicit language in Clause 22 regarding the standard 30% deduction on income from house property, emphasizing that this should be applied after municipal taxes are deducted. The Committee also proposed that pre-construction interest deductions be available not only for self-occupied properties but also for those that are rented out.

Furthermore, clarity was sought in the realm of scientific research deductions, with the Committee advocating for a revision to specify when approvals are necessary. Similarly, the report highlighted the need to restore the term “adjusted gross total income” in clauses related to donations to avoid unintended tax benefits.

Support for Small Taxpayers and NPOs

The panel’s recommendations include provisions that could significantly benefit small taxpayers. It criticized the current requirement that mandates low-income individuals to file an income tax return solely to claim refunds for tax deducted at source (TDS). The Committee suggested removing this stipulation to prevent unnecessary legal repercussions for non-filing.

Special attention was given to non-profit organizations (NPOs), particularly those with dual religious and charitable objectives. The Committee recommended reintroducing the “religious-cum-charitable” category for exemptions on anonymous donations. It also emphasized using “income” instead of “receipts” for tax purposes, aligning with the principle of taxing actual income.

Addressing Legal Loopholes and Ensuring Continuity

The report calls for a careful redraft of certain clauses to maintain legislative intent. This includes revisions related to the computation of capital gains, the carry-forward of losses, and the eligibility for refunds when one person’s income is included in another’s. A notable concern was the proposed change of “shall” to “may” in penalty clauses, which could grant authorities undue discretion in non-compliance cases.

On the issue of tax avoidance, the Committee expressed support for the General Anti-Avoidance Rules (GAAR) but insisted on reinstating the phrase “in the circumstances of the case” to ensure assessments consider the specific context.

Modernization and Administrative Efficiency

In its recommendations, the Committee has also emphasized the need for modernizing administrative processes. This includes extending the compliance window for non-resident liaison offices from 60 days to eight months and removing fixed application fees in advance ruling cases to allow for greater flexibility.

Furthermore, the Committee approved Clause 536, which repeals the 1961 Act, with suggestions to ensure a clean consolidation of references, thereby preserving continuity through savings clauses.

Experts in the field have recognized the significance of these recommendations. Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, stated that the report aims to enhance legal clarity and taxpayer equity while facilitating a smooth legislative transition.

Rohinton Sidhwa, Partner at Deloitte India, noted that the amendments are corrective measures intended to fix drafting errors from the initial public comment draft. He pointed out that the provisions are now aligned with the original act.

Looking Ahead

The Select Committee’s 32 recommendations provide a roadmap for refining the Income Tax Bill, balancing the need for simplification with necessary safeguards. Whether the government will adopt these recommendations in full or in part remains uncertain, but their potential implications for individuals, businesses, and civil society are significant.

As the legislative process continues, the focus will be on ensuring that the final version of the Income Tax Bill, 2025, reflects a coherent and fair taxation framework for all stakeholders involved.

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Lok Sabha Adjourned as Opposition Protests Demand Debate

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The Lok Sabha was adjourned on July 31, 2023, due to significant uproar from members of the opposition. The protests stemmed from demands for a discussion surrounding the recent Pahalgam terror attack. Speaker Om Birla made the decision to suspend proceedings until 12:00 noon as opposition MPs raised slogans during the commencement of the Question Hour.

The Monsoon Session of Parliament began at 11:00 AM after a break of over three months. The opening proceedings included paying tributes to the victims of both the Pahalgam attack and the Air India AI-171 plane crash. Following the tributes, Speaker Birla attempted to initiate the Question Hour, but opposition members immediately began their protest.

Birla addressed the uproar, asserting, “The government wants to answer on every issue. The House should function. You have not come here to raise slogans. The House functions as per the rules and regulations. All the issues raised according to the rules will be discussed.” Despite his remarks, the protests continued, prompting the adjournment.

The opposition, represented by the INDIA bloc, is particularly focused on demanding that Prime Minister Narendra Modi address the House regarding Operation Sindoor and the claims made by former US President Donald Trump about brokering peace between India and Pakistan. Additionally, they are seeking a discussion on the ongoing Special Intensive Revision (SIR) of electoral rolls in Bihar.

As this session unfolds, the tensions between the ruling party and the opposition appear poised to impact the legislative process significantly. The demands for transparency and accountability on national security issues highlight the ongoing political discourse in the country. The outcome of the protests and the subsequent discussions will likely shape the focus of the Monsoon Session in the days ahead.

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Bill Clinton Strengthens US-India Ties Amid Pakistan Tensions

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The relationship between the United States and India significantly improved during the presidency of Bill Clinton, marking a critical shift in the geopolitical landscape of South Asia. As tensions escalated with Pakistan, Clinton’s administration focused on strengthening ties with India, underscoring a new era of cooperation and dialogue.

Shifting Alliances and Economic Reform

The end of the Cold War in the early 1990s opened avenues for the United States and India to mend their previously strained relationship. With the fall of the Berlin Wall and the diminishing threat of Communism, both nations found common ground. The economic reforms initiated by India’s government in 1991 further facilitated engagement, as American corporations sought opportunities in what was then the world’s second-largest untapped market.

During the first Persian Gulf War, India allowed US military planes to refuel on its territory, a gesture that fostered goodwill. In contrast, Pakistan’s ongoing nuclear ambitions and support for militant groups strained its ties with Washington. Although the administration of George H.W. Bush never officially labeled Pakistan a state sponsor of terrorism, it privately held significant concerns about its actions, particularly regarding militant activities in Kashmir.

Clinton’s Diplomatic Dance with India and Pakistan

As Bill Clinton took office in 1993, the shift towards India became increasingly apparent. Initially, the US was preoccupied with the implications of the Cold War’s end, which made it hesitant to engage fully with India. However, by Clinton’s second term, the focus on building stronger Indo-US relations intensified.

The situation took a dramatic turn in 1998 when India conducted nuclear tests, prompting international criticism and subsequent sanctions. In response, Pakistan also conducted its tests, escalating regional tensions. Despite these challenges, extensive discussions between US and Indian officials laid the groundwork for a renewed trust that would shape future interactions.

The critical moment came during the Kargil Conflict in 1999, when Pakistani-backed militants infiltrated Indian territory. The United States pressured Islamabad to withdraw its forces, signaling a commitment to India’s security and further solidifying their partnership.

Clinton’s visit to India in 2000 marked a diplomatic triumph. This was the first visit by a sitting US president since Jimmy Carter in 1978. Accompanied by his wife and daughter, Clinton’s genuine admiration for Indian culture resonated with the public and political leaders alike. His visit coincided with a tragic incident in Kashmir, where militants killed several Sikhs, deepening his empathy for India’s ongoing security challenges.

In a significant address to the Indian Parliament, Clinton acknowledged India’s right to determine its interests despite its refusal to sign the Nuclear Non-Proliferation Treaty (NPT). He expressed solidarity with India’s concerns regarding Pakistan’s actions, stating, “I share many of your government’s concerns about the course Pakistan is taking.”

In stark contrast, Clinton’s brief stop in Pakistan was marked by a different tone. The arrival was shrouded in precaution, with a decoy plane landing first to ensure his safety. During a private meeting with Pervez Musharraf, Clinton urged Pakistan to confront militant groups operating in Kashmir, clearly indicating that Washington held Pakistan responsible for much of the conflict in the region.

Clinton’s message to the Pakistani public was equally direct. In a televised address, he emphasized that “violence and extremism” hindered Pakistan’s democratic aspirations, further distancing the US from Islamabad during this critical period.

The dynamics of US-India-Pakistan relations during the Clinton administration illustrate a notable pivot towards India, characterized by diplomatic engagement and a shared commitment to regional stability. As Clinton’s presidency drew to a close, the groundwork laid during this time would continue to influence the geopolitical landscape in South Asia.

In the next installment, we will explore the complexities of George W. Bush‘s presidency, particularly in relation to the post-9/11 world and its impact on nuclear negotiations with India.

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India Seizes Opportunities in Global Critical Minerals Race

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Prime Minister Narendra Modi recently completed a significant five-nation tour across Africa and the Americas from July 2 to July 9, 2023. This visit was strategically aimed at enhancing India’s position in the global critical minerals sector. The focus on establishing mutually beneficial partnerships for the exploration and exploitation of rare earth elements has gained momentum, particularly in the context of geopolitical and geoeconomic shifts. Countries visited included Ghana, Trinidad and Tobago, Argentina, Brazil, and Namibia, where India has been actively pursuing strategic partnerships to secure vital mineral resources.

India’s public sector undertaking, KABIL (Khanij Bidesh India Limited), has already secured contracts in Argentina. Additionally, the National Mineral Development Commission (NMDC) is actively engaged in various initiatives across Africa. India has been negotiating with the countries within the lithium triangle—Argentina, Chile, and Bolivia—to acquire mining concessions for lithium and other critical minerals essential for green technologies and advanced manufacturing, as stated by MEA Secretary Kumaran.

India’s Strategic Shift in Mineral Geopolitics

The demand for critical minerals has surged in the 21st century, where they have become essential for technological advancement. From electric vehicles to military applications, these minerals are vital for modern innovation. Currently, the global supply chain is heavily reliant on China, which dominates the processing and manufacturing of rare earth elements. This monopoly has allowed China to leverage its dominance strategically, often using it as a tool in international relations.

China’s historical success in the rare earth sector stems from decades of industrial planning, substantial government subsidies, and a willingness to overlook environmental concerns associated with extraction and processing. The Bayan Obo mine in Inner Mongolia stands as a testament to this success, creating a self-sustaining supply chain. By consolidating producers into state-owned enterprises and adopting liberal trade policies, China has managed to exert significant control over pricing and availability. This became evident during China’s 2010 embargo on Japan and its recent restrictions on heavy rare earths in April 2025, which underscored the global risks associated with a centralized mineral supply chain.

In response to these challenges, countries like the United States are ramping up domestic production and forming partnerships with allies such as Canada and Australia to diversify their supply chains. Japan has also taken steps to reduce its reliance on Chinese minerals by supporting Australian companies like Lynas Corporation. Meanwhile, the European Union is exploring alternative sources and enhancing recycling efforts. Despite these initiatives, the complexity and costs associated with processing rare earths continue to pose significant obstacles.

India’s Emerging Role in the Global Minerals Landscape

India’s potential in this global shift is increasingly urgent. With the world’s third-largest reserves of rare earth elements, the country is awakening a sector that has long been underutilized. The National Critical Mineral Mission (NCMM), launched in 2025, aims to undertake over a thousand exploration projects by 2030, fostering innovation in mineral recovery. Regulatory changes and fast-tracked permitting processes are designed to attract private investment and expertise, marking a significant shift in India’s mineral policy.

A key player in this transformation is IREL (India) Ltd, which has expanded its operations from raw material extraction to the production of advanced materials like magnets. With facilities in Visakhapatnam and Bhopal, IREL is now supplying products for aerospace and defence applications while exploring potential deposits in countries like Oman and Sri Lanka to diversify its supply base.

International partnerships play a crucial role in bolstering India’s mineral strategy. The India-Australia Critical Minerals Investment Partnership facilitates joint ventures and research and development initiatives, while cooperation agreements with Ghana and Brazil enhance India’s global reach. Additionally, India has established bilateral agreements for supply diversification, including a significant deal with Kazakhstan for rare earths and critical metals. Participation in international forums such as the Quad and the Minerals Security Partnership positions India alongside democratic nations aiming to counter China’s influence in the mineral sector.

Despite these advancements, challenges remain. The Atomic Energy Act of 1962 classifies monazite as a restricted substance due to its thorium content, which discourages private mining ventures. Furthermore, India’s domestic infrastructure for refining and magnet manufacturing is still in its developmental stages, and environmental issues related to radiation and waste management require careful oversight. The volatile nature of mineral markets also adds uncertainty to India’s ambitious plans.

India is currently finalizing a ₹5,000 crore Production-Linked Incentive (PLI) scheme aimed at boosting domestic magnet manufacturing. Interest from companies such as Mahindra & Mahindra and Sona Comstar reflects growing confidence in the sector’s potential. Additionally, urban mining and e-waste recycling are emerging as sustainable practices that align with circular economy principles, reducing the environmental burden associated with raw material extraction.

India’s transition from passive dependence on mineral imports to a more self-sufficient and strategic approach is underway. The shift has sparked global discussions about alternatives to China’s dominance, highlighting India’s role as a serious contender in the critical minerals landscape.

As India navigates this intricate geopolitical landscape, its commitment to reform, innovation, and international collaboration could redefine global supply chains. The current moment presents an opportunity for India to transform challenges into prospects for leadership in the minerals sector. By investing in domestic capacity, fostering resilient partnerships, and embracing innovative practices, India can move beyond simply reacting to China’s actions and establish itself as a key player in shaping a more balanced mineral order.

In conclusion, China’s rare earth monopoly poses significant challenges but also serves as a catalyst for change. For India, this is not just a question of supply chains; it represents a crucial geopolitical moment. As the country enhances its mineral wealth, reforms its policies, and strengthens international ties, it is poised to alter global dependencies and create a more secure future in the minerals race. The path ahead may be complex, but the potential for India to emerge as a leader in this vital sector is clearer than ever.

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Chennai Court Grants Anticipatory Bail to Madurai Adheenam

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A principal sessions court in Chennai has granted anticipatory bail to Madurai Adheenam, a prominent religious leader, following his controversial statements regarding an alleged conspiracy to murder him. On May 2, 2023, the Adheenam claimed that while he was en route to a Saiva Siddhanta conference, his vehicle was struck by another car near the Ulundurpet-Salem roundabout. He suggested that the incident was linked to Pakistan, igniting widespread attention and debate across social media.

The court’s decision came after Judge S. Karthikeyan reviewed the statements made by the Adheenam and determined they did not amount to hate speech. In his ruling, he noted that while the Adheenam’s comments were exaggerated, they did not indicate an intention to incite communal hatred. The judge remarked, “It is sorry to record that it is the media person who repeatedly raised several questions and obtained certain answers from the Adheenam, which later became controversial.”

The court mandated that the Chennai Crime Branch police release the Adheenam on bail in the event of his arrest or upon his appearance. Given that the Adheenam is above 60 years of age, he is not required to attend inquiries outside of his usual residence.

During a press conference following the incident, the Adheenam alleged that individuals in the car that collided with his vehicle were wearing caps traditionally associated with Muslim men and had beards. This narrative quickly gained traction online. However, subsequent investigations, including CCTV footage, indicated that the Adheenam’s car had been speeding and that the other vehicle had stopped after the collision.

In response to the Adheenam’s statements, advocate Rajendran from Chennai filed a complaint with the cybercrime police, arguing that the Adheenam’s remarks could lead to misunderstandings and potential conflict between religious communities. A case was subsequently registered against the Adheenam, prompting him to seek anticipatory bail.

This case highlights the delicate balance between freedom of speech and the potential for inflammatory statements to disrupt social harmony. The court’s decision to grant bail reflects the complexities involved in navigating such issues within the legal framework. As the situation develops, it may further influence discussions around communal relations and media responsibilities in reporting sensitive topics.

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