Taxpayers Relief: The government has taken an important decision for taxpayers, which will give them great relief. Now during any search operation, the Income Tax Officer will evaluate only the undeclared income and not the entire income of the taxpayer. This change has been proposed under the Finance Bill, 2025.
Amendment to Finance Bill approved
On Tuesday, the Lok Sabha approved the Finance Bill, 2025, which includes this amendment. According to the government, this amendment will be effective from September 1, 2024 and will be implemented retrospectively. This change will relieve taxpayers from unnecessary tax pressure and promote a fair tax system.
What is the new change?
Under this amendment, changes have been made in Chapter 14-B of the Income Tax Act, which will give priority to the assessment of ‘undeclared income’ instead of the assessment of ‘total income’. Earlier, the Income Tax Department used to assess the entire declared and undeclared income after the search, which put an additional tax burden on the taxpayers. Now under the amended rule, if a search operation is conducted against a taxpayer, then his assessment will be done only on the basis of undeclared income and not on the basis of his total income.
New guidelines of Income Tax Department
The Income Tax Department has issued ‘Frequently Asked Questions’ (FAQs) to clarify this change. The department said that this is an ideal step towards making search operations more transparent and fair. According to the Income Tax Department, now if a taxpayer comes under search operation, then his undeclared income will be taxed separately, while regular income will have to be taxed as per the normal tax slab.
How will the change benefit taxpayers?
- Reduction in unnecessary tax burden: Now taxpayers will have to pay tax only on undeclared income, which will reduce the chances of misassessment.
- Fair tax system: Tax administration processes will be made more transparent and equitable.
- Relief in old cases: This amendment will be effective from September 1, 2024, due to which taxpayers can get benefit even in old pending cases.
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