There are a few provisions in the Income Tax Act that allow deductions for setting aside a certain amount of money in funds earmarked for specified purposes. In this article, we explore section 33ABA, which allows a deduction in respect of a contribution made to a site restoration fund.What is Site Restoration Fund?Broadly speaking, this fund is generally maintained by entities who are involved in the business of mining, quarrying, waste treatment, oil and gas exploration, etc., These kinds of business necessarily involve contamination of the place in which the business activity is carried out. So, a fund is generally maintained by these business entities. At the end of business activity, the site is restored, and contaminations and damages are made good to the extent that it can be safely used and accessed for other purposes by the public at large. This is the reason behind the maintenance of the site restoration fund.What is Section 33ABA?Broadly speaking, Section 33ABA of the Income Tax Act provides deductions against the amount set aside for site restoration for petroleum and natural gas businesses.What is the Intent Behind Section 33ABA?These provisions in the act encourage setting aside money for restoring site damages so that businesses do not face a shortage of funds when reviving the site at the end of their business cycle. This would ensure seamless restoration of the site, thereby avoiding the potential hazards of leaving the site environmentally unsafe.Who is Eligible for Deduction u/s 33ABA?Deduction under this section is provided only for the following businesses related to petroleum and natural gasExtraction - Extraction from the fields Prospecting - Finding the potential petroleum and gas deposits underground Production - Refining the crude oil into petrol and other useful products In addition, the Central Government should have entered into an agreement with such business.Deduction Allowed u/s 33ABADeduction can be allowed for the amount deposited underSpecial bank account in the State Bank of India under the scheme specifically approved by the Ministry of Petroleum and Natural Gas, orSite Restoration Account specified in a scheme framed by the Ministry of Petroleum and Natural Gas,Quantum of Deduction AllowedThe eligible business can claim a deduction of - Amount deposited*It is to be noted that the maximum deduction allowed is restricted to 20% of its profits as calculated under the Income Tax Act.**Deposit of funds needs to be made before the end of the financial year.Note:*Interest credited to the aforesaid bank accounts can also be considered as deposit amount.

The Income Tax Act 1961 has a mechanism for ensuring compliance by issuing notices to assessees the department considers non-compliant. These notices can be a request for information or demand tax payment/penalty for non-compliance. However, it should be noted that all the notices should be issued according to the provisions of the act. If the notice is not issued per the act, it is rendered void, invalidating the tax demand and penal procedures. Therefore, as taxpayers, it is essential for us to understand the notices that can be issued under different sections of the act, as well as the time limits and other compliance aspects.Section 142(1) - Inquiry Before AssessmentSection 142 deals with the procedures related to inquiries before the department assesses an assessee's income.

The provisions of Income Tax allow businesses and professionals to claim the expenses they incur in the course of business as deductions. After claiming all deductions, the net profit is considered for income tax calculations.However, these provisions related to deductions can be misused, and businesses may claim more deductions than are rightfully claimable. Therefore, there are provisions incorporated in the law to restrict deduction claims upon satisfaction of certain conditions or completely forbid certain deductions in certain situations. In this article, we discuss disallowances given under section 40A of the Income Tax Act.What is the Intent Behind Section 40A?The purpose of this section is to Mandate proper documentation of expenses claimedRestrict the deductions only to the extent that it is reasonableEncourage non-cash payments - (Predominantly digital mode)Ensure transparency in related-party transactions.It is to be noted that the provisions in section 40A have an overriding effect on the remaining provisions of the act. This means that in case of any conflicting circumstances between section 40A and other provisions - the provisions in this section shall prevail over other sections.Summary to Section 40ABroadly, section 40A discusses deductions pertaining to Related Party TransactionsPayment made in modes other than prescribedOther disallowancesRelated Party Transactions This section gives discretion to assessing officer to disallow payments made to related parties, if the assessing officer opines that it is such deduction claim is excessive or unreasonable.Who are the Related Parties?Though people's perceptions of relatives vary, the term related party, as per the Income Tax Act, depends on the assessee's legal status.

Carrying forward loss is one of the significant benefits of the Income Tax Act to assessees. The taxpayer can carry forward the current financial year's losses and subtract them from the profits of succeeding financial years. The act prescribes whether a particular loss is eligible to be carried forward, the period until which it can be carried forward, and the heads of income against which a specific loss can be set off. In this article, we will understand whether a successor can carry forward loss in particular situations through an interesting case law.Pramod Mittal v. CITThe High Court of Delhi passed the judgment on 11-10-2012.Facts of the CaseThe assessee and his brother were partners in a firm.

The Income Tax Act contains sections addressing particular deductions under the head income from business or profession. Broadly, specific deductions are discussed under sections 30-36 of the act. Section 37, however, is a residual provision that covers deductions not specified under any other sections of the Act. This article will explain the general rules for claiming deductions under section 37 with an interesting case law.Section 37 -General DeductionsSection 37 deals with general deductions. The assessee can claim a deduction under this section only when the particular deduction is not covered under other sections.

Capital Gains arise on the occasion of the ‘transfer’ of capital assets. Section 2(47) defines transfer for the purpose of the Income Tax Act. Any transfer of a capital asset falling under this definition will trigger capital gains implications, potentially leading to a tax liability. In this article, we will understand an interesting case law that throws light on the meaning of transfer in substance, providing a deeper perspective on the incidence of capital gains.Meaning of TransferTransfer under section 2(47) of the Income Tax Act means a sale, exchange, relinquishment, compulsory acquisition, etc., of a capital asset. We can broadly infer that transfer encapsulates any event or happening that makes the capital asset no longer controllable by the assessee in substance because someone else has taken control of the asset.Seshasayee Steels P.

When an asset is used continuously for a long time, its value deteriorates due to wear and tear and obsolescence. This can be broadly called depreciation. The Income Tax Act prescribes rates and methods of computation for depreciation for different classes of assets. In this article, we will learn about depreciation and its tax implications in the case of a leased asset through interesting case law.I.C.D.S. Ltd.

The changes made in Budget 2025 by the government have been specifically beneficial for middle income earners who earn salary income. In recent times, there has been relaxation of slab rates, extension of deductions available to salary income, and other deductions made available to assessees which would help to save taxes. Check out the below article to know all the tax saving options available for the income range of Rs.13,00,000. Please note that this article applies only to tax implications pertaining to the financial year 2025-26 only. New Tax Regime Slab RatesThe salary income earned up to Rs.12.75 Lakhs will ultimately have Nil tax liability. Here's how!The revised slab rates for new tax regime applicable for FY 2025-2026 is as follows:As per the latest Finance Act 2025, changes have been made in the slab rate for the new tax regime applicable for FY 25-26 as follows - Income Tax SlabsTax RateUp to Rs. 4,00,000NILRs.

The need to simplify the existing tax laws, which are complicated more often than not, was first felt by the lawmakers in the year 2009. On February 7, 2025, the new Income Tax Bill, 2025 was approved by the Cabinet and has now been tabled in the parliament. Once the bill is passed in the Parliament, it will become an act or code whatsoever. If passed in parliament, the new Income Tax Bill will become effective on 1st April 2026.Let's look at the key differences between the existing Income Tax Act and the proposed Income Tax Bill 2025.Structural ChangesThe new Income Tax Bill has reduced content as compared to the current Income Tax Act. The section count has been reduced from more than 700 odd sections to 536. For example, Section 80C is different from Section 80D. In the new bill, all clauses (or sections) are numbered sequentially, without the use of alphabets in the section numbers.

There are various provisions in the Income Tax Act that have been removed, citing the compliance burden and complexities in the hands of the tax payers. One such provision that was removed relates to the concept of Fringe Benefit Tax. It was introduced in the year 2005. Though it prevented the non-taxation of certain benefits given, it was revoked in 2009, citing the administrative complexities and additional compliance burden for the employer.What Is Fringe Benefit Tax?As the name suggests, Fringe Benefit Tax is the tax levied on the benefits provided by the employer to employees in addition to salary. This is a tax which needs to be paid by the employer.This is not a tax that is paid on income earned. It is a tax paid as a percentage of the quantum of benefits provided by the employer to an employee (tax on expenses incurred)Simply speaking, this is a disallowance in the hands of the employer.What Is The Intent Behind The Levy Of Fringe Benefit Tax?Salary, allowances, perquisites, and other benefits provided are taxable in the hands of the employee under the provisions of the Income Tax Act.By disclosing certain employee benefit expenses not as salary in the books, the company was able to claim the expenses.