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Income Tax Bill 2025: Select Committee on Transfer Pricing

23 July 20251 min read
ECONOMYIncome Tax Bill2025: SelectCommittee onTransfer Pricing23 July 2025safalsetu.com

Why in the news

A parliamentary panel gave views on the draft Bill, chiefly on how dealings between related companies would be taxed.

Key facts

  • Substantive influence: scrutiny could follow where one firm strongly influences another, without thresholds like 26% voting rights or majority board control.
  • Associated Enterprises (AEs): the two limbs of today’s definition become independent provisions.
Aspect1961 Act2025 Bill
AE testFormal thresholds plus management influenceInfluence alone may trigger scrutiny
Court readingLimbs read togetherTreated as independent

Implications

  • Wider transfer pricing coverage, more compliance for intra-group and cross-border dealings, higher litigation risk.

Other recommendations

  • House property: 30% standard deduction after municipal taxes; pre-construction interest deduction for let-out property.
  • No mandatory return filing for those wanting only refunds.

Exam angle

  • Transfer pricing and AEs; reviewer: Lok Sabha Select Committee.

Test yourself

1. Which body submitted recommendations on the draft Income Tax Bill, 2025 discussed in these notes?

A Select Committee of the Lok Sabha submitted the recommendations.

2. Under the proposed substantive influence clause, what could trigger transfer pricing scrutiny?

Scrutiny may apply on substantive influence without meeting formal thresholds.

3. What standard deduction on house property income is mentioned in the draft Bill notes?

The notes say 30% standard deduction after subtracting municipal taxes.

This topic is part of Daily Current Affairs 22 July 2025 (14 topics).

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