What is the Code on Social Security, 2020 — And Why It Matters

The Code on Social Security, 2020 is a comprehensive labour-law reform which consolidates multiple existing social-security and welfare-related laws into a unified legal framework. 

Previously, social security coverage in India depended on a patchwork of separate laws — for provident fund, gratuity, health insurance, maternity benefits, compensation for workplace injury, and welfare schemes for unorganized workers. The old structure often meant complex compliance for employers, and uneven or no coverage for many workers — especially in unorganized, informal, gig, or platform-based employment. 

The Social Security Code aims to change that: by merging nine central labour-welfare laws into a single “code,” it seeks to provide a universal, inclusive, and simplified social security framework — covering workers in organised and unorganised sectors, including gig and platform workers, self-employed, home-based workers, migrants, and daily-wage labourers. 

In essence: the Code represents a paradigm shift — from fragmented, sector-wise welfare laws to a unified, potentially universal safety net.

Key Provisions & What They Mean

Here’s a breakdown of the major features of the Code on Social Security, and their practical implications:

✅ Unified Coverage — Formal, Informal, Gig & Platform Workers

The Code’s coverage extends to all workers — regardless of whether they are in formal/organized sector or informal/unorganized sector; including casual labourers, self-employed persons, home-based workers, migrants, gig-workers and platform-based workers. 

For the first time in Indian labour law, gig and platform workers (e.g. delivery partners, ride-hailing drivers, freelance/contract-based remote workers, etc.) are explicitly recognized under social security provisions. 

To facilitate this, the Code provides for creation of a National Social Security Board and corresponding State Social Security Boards / Welfare Boards to frame and manage welfare schemes for unorganized, gig or platform workers. 

A Social Security Fund is envisaged — financed by central/state contributions, aggregator (platform) contributions, CSR funds, and other sources — to support benefits for gig and platform workers. 

Implication: Millions of workers who earlier had no formal social security — including informal-sector workers, gig-workers, contract labourers — become eligible for welfare benefits (pension, provident fund, health, maternity, insurance, gratuity etc.), significantly expanding the social safety net.

🧾 Uniform Definition of “Wages” & Social Security Benefits

Under the Code, “wages” for social security purposes includes basic pay, dearness allowance (DA), retaining allowance. 

Other components — allowances (house rent, conveyance), bonus, overtime wages, commission etc. — are generally excluded from “wages” under the Code. 

However, there is a safeguard: if the excluded components exceed 50% of the total remuneration, the excess portion will be treated as “wages.” This prevents employers from artificially reducing “wages” (and hence social security contributions/benefits) by inflating allowances. 

Implication: Social security benefits tied to “wages” — like provident fund, pension, gratuity — will now be based on a more standardized and transparent wage definition. It prevents misuse of salary structure to bypass contributions, and ensures fairer benefit calculations.

🏥 Expanded Welfare & Social Security Benefits

The Code aims to provide a broad spectrum of social security benefits, including:

Provident Fund / Pension / Deposit-Linked Insurance (through extension of institutions like Employees' Provident Fund Organisation — EPFO) 

Health insurance, sickness benefits, maternity benefits, disability cover, life insurance (through extension of institutions like Employees' State Insurance Corporation — ESIC) 

Gratuity — including for fixed-term employees (after one year of continuous service) instead of previous longer requirement. 

Compensation for work-related injuries including accidents, and importantly — accidents during commuting (home ↔ workplace) are now treated as work-related, making such accidents compensable. 

Maternity and related benefits — maternity leave, medical benefits — for eligible female (and possibly transgender) employees. 

Implication: The Code significantly broadens the welfare and safety nets for workers; enabling not just formal employees but also informal, casual, gig, and unorganised workers to access key social security benefits.

🧑‍💼 Inclusion of Fixed-Term, Contractual, and Non-Standard Workers

Under the Code, even fixed-term employees (contractual or term-based) are eligible for gratuity after one year of continuous service (versus earlier requirement of 5 years). 

The Code’s universal coverage aims to reduce discrimination between permanent and non-permanent workers, in terms of social security benefits. 

Implication: Many workers in sectors with high contract or temporary workforce — like IT, logistics, retail, services, gig economy — stand to benefit with better job-security, benefit eligibility and welfare protections.

📄 Registration, Portability & Unified Framework

The Code provides for a unified registration mechanism: workers — especially unorganised, gig and platform workers — will be registered through a national portal / database (with Aadhaar verification or identity online), and allotted a unique identification number. 

Social security benefits become more portable — a worker’s account and benefits stay intact even if she/he changes employer, moves across states, switches from formal to informal sector, or changes type of employment. 

The Code subsumes and replaces nine previous laws, eliminating overlapping legislation and reducing complexity — this simplifies compliance for employers and improves clarity for workers. 

Implication: A unified, comprehensible, portable social security framework; reduces bureaucratic burden, confusion, redundancy — better for workers’ mobility, employers’ compliance, and overall governance.

⚖️ Simplified Compliance, Digital & Administrative Reforms

The Code envisages digital record-keeping (online registration, electronic returns, digital monitoring), making administration easier and more transparent. 

Some offences under older laws are decriminalized or penalty-based rather than imprisonment; inspector roles are redefined as “inspector-cum-facilitator,” promoting facilitation over punitive inspection. 

The standardized definition of wages and benefits reduces litigation risk arising from varied interpretations under multiple laws. 

Implication: For employers — easier compliance, fewer overlapping laws. For workers — transparent, digitally traceable welfare. For regulators — more efficient governance.

Why the Code Matters — Broader Significance

Social justice & inclusion: By bringing informal, unorganized, gig and platform workers under formal social security umbrella, the Code addresses long-standing inequities in labour protection. For a country like India, with a vast informal workforce, this could be transformative.

Workforce formalization: Encourages transition from informal to formal employment, helps pooling of funds, better regulation, and ultimately, more stable worker-employer relationships.

Labor market modernization: The Code aligns with the evolving nature of work — gig economy, fixed-term contracts, remote/flexible work — making social security law relevant to the 21st-century labour market.

Ease of doing business: Consolidation of multiple laws into one simplifies compliance burden for employers; digitalization and streamlined administration can reduce red-tape and ambiguities.

Mobility & portability: Especially beneficial for migrant workers, seasonal or contract labourers — who often lose benefits when switching jobs or states — as social security becomes portable.

Challenges & Areas to Watch

While the Code has great promise, its real-world success will depend on execution. Some potential challenges:

Awareness and registration: Many informal, unorganized, or gig workers may not be aware of their rights or may find registration (even if simplified) a hurdle. Outreach and simplified registration process will be key.

Implementation at ground level: Extending EPFO / ESIC / welfare benefits across remote rural areas, small employers, unorganized sectors — ensuring fund contributions, compliance, and benefit delivery — will be challenging.

Funding & financial sustainability: For gig/unorganized workers, financing welfare schemes (especially pension, insurance, health-cover) via Social Security Fund needs sustainable funding — contributions, state support, aggregator contributions etc. Monitoring and transparency are crucial.

Uniform adoption across states: Since labour is partially a concurrent subject in India, ensuring uniform adoption, state-level regulatory readiness, and consistent implementation across states matters.

Administrative load & transition: Employers (especially small businesses) and HR/payroll departments need to recalibrate salary structures, payroll systems, definitions of wages, maintain digital records — transition may be resource-heavy initially.

Ensuring benefits reach target groups: Unorganized workers, migrants, gig workers — often transient, informal — need mechanisms to claim benefits; effective grievance redressal, awareness, ease of claims, and portability will matter for real impact.

Key Take-Aways — For Workers, Employers & Citizens

Stakeholder What They Should Know / Do.                                                                Workers (formal, informal, contract, gig, platform, migrant, daily-wage)          You now have a right to social security benefits — provident fund, pension, health insurance, maternity, gratuity, injury compensation — irrespective of your sector or job type. Register yourself (via the national portal), get your unique ID, and ensure your employer is compliant.

Employers / Businesses (small, medium, large, formal or informal)                      Review and restructure payroll and salary/wage definitions; register establishments/workers; contribute to provident fund / social security schemes; maintain digital records; be ready for compliance.

Policy-makers / Government & State Authorities                                                     Ensure nationwide implementation: registration facilities, social security fund setup, inclusion of unorganized/gig workers, effective awareness campaigns, streamlined benefit disbursement and grievance mechanisms.

Society / Labour Rights Advocates / Civil Society                                               Monitor ground-level impact, awareness especially among vulnerable workers; push for transparency in fund usage; advocate accessibility of social security benefits to unorganized, migrant, and gig workers.

Conclusion

The Code on Social Security, 2020 is a landmark reform — a bold attempt to re-imagine social welfare and labour protection in India for the modern age. By subsuming nine major welfare laws, expanding protection to informal and gig workers, and simplifying compliance through a unified framework, it holds the potential to significantly improve worker welfare, formalize the workforce, and promote fairness and dignity across employment types.

However, the promise will only be realized through effective implementation — diligent registration, fund management, outreach, enforcement, and administrative readiness. For workers and employers alike: understanding the Code, rights and obligations is no longer optional — it is essential.

What is the Code on Wages, 2019 — and Why It Matters

 India historically had multiple labour laws governing wages, bonuses, and remuneration — each with its own definitions, thresholds and applicability. The result: a fragmented, often confusing, legal framework that varied by sector, employment type, region and even industry. 

The Code on Wages, 2019 was enacted to consolidate several of these laws into a single unified statute, bringing clarity, reducing compliance complexity, and extending protections more broadly. Specifically, it subsumes:

Payment of Wages Act, 1936

Minimum Wages Act, 1948

Payment of Bonus Act, 1965

Equal Remuneration Act, 1976 

By doing so — and standardising definitions, wage rules, bonus eligibility, and non-discrimination — the Code aims to create a uniform legal framework across India. 

With effect from 21 November 2025 (as part of India’s broader labour-law reform package), the Code on Wages is now one of the central labour laws in force. 

In short: the Code is a landmark reform meant to simplify regulations, strengthen worker protections, and bring uniformity in wage and bonus laws across sectors and states.

Core Provisions & What They Mean

Here are the key elements from the Code, and what they imply in practice.

✅ Universal Minimum Wage & National Floor Wage

Under Section 5 of the Code, every employee — in both organised and unorganised sectors — has a statutory right to a minimum wage. This extends minimum-wage protection beyond what was earlier limited to “scheduled employments”. 

The Code also mandates a national floor wage — a baseline below which minimum wage rates fixed by states cannot fall. 

Minimum wages must consider factors like skill level, geographical area, job difficulty, hazardous work conditions etc. 

What this means: Workers across India — irrespective of whether they are in formal factories, unorganised construction sites, small businesses, or daily-wage work — now have legal entitlement to a minimum wage. This reduces exploitation and wage disparity, especially for vulnerable and informal-sector workers.

📄 Uniform Definition of “Wages”

Before the Code, different laws had different definitions of “wages,” leading to overlap, exclusions, and confusion. 

The Code standardises the definition of “wages” — including basic pay, dearness allowance, retaining allowance — while explicitly listing exclusions (e.g. certain allowances, bonuses, employer contributions, etc.). 

Importantly, there is a proviso: exclusions must not exceed 50% of total remuneration. If they do, the excess gets counted as wages. This ensures employers do not structure salary components artificially to circumvent minimum-wage or bonus obligations. 

Implication: Greater transparency in salary composition; reduces ambiguity or misuse of allowances to underpay workers. Helps ensure fairness for employees across sectors and roles.

📅 Timely Payment of Wages & Mandatory Wage Slips

Wages can be paid via bank transfer, cheque, cash or electronic mode; employer must fix a wage-period (daily, weekly, fortnightly, monthly). 

The Code prescribes strict timelines for payment — e.g. monthly wages to be paid within a specified number of days, final wages (on termination/resignation) within two working days. 

Employers must issue wage slips (physical or electronic) at the time of payment, ensuring transparency. 

Why it matters: Regular, timely payment safeguards workers from financial stress. Wage slips give documentary proof — useful for disputes, audits, social-security documentation, etc.

💰 Statutory Bonus & Overtime Pay

Employees earning up to a threshold (as notified by government) and working at least 30 days in a year are eligible for an annual bonus. The minimum bonus is 8.33% of wages (or a minimum fixed amount), with a ceiling at 20%. 

For overtime (work beyond normal working hours), the Code mandates pay of not less than twice the normal wage rate. 

Impact: Workers receive fair compensation for extra work; bonus eligibility formalises profit-sharing for eligible employees, enhancing morale and aligning incentives.

🚻 Gender Equity & Equal Remuneration

The Code prohibits discrimination in wages, recruitment, or employment conditions on the basis of gender (including transgender identity), for the same or similar work. 

This builds upon earlier equal-remuneration laws but broadens scope and makes non-discrimination universal across all employees. 

Meaning in practice: Women and gender minority workers doing same or similar work must be paid equally — reducing wage disparities and promoting workplace equality.

Broader Significance: Social Justice, Economic Stability & Ease of Doing Business

Adopting the Code has multiple advantages for stakeholders:

For workers: fair wages, timely pay, bonus rights, greater transparency, safeguards against exploitation, formal recognition even in informal sectors. 

For employers: simplifies compliance (one code instead of multiple laws), reduces regulatory burden (fewer forms/registers), clarity in wage-structures and statutory obligations. 

For economy and society: by bringing previously unprotected workers under legal wage umbrella, promoting equitable growth, reducing wage-inequality, and fostering trust in formal employment. 

In fact, according to the government, the Code plays a key role in modernizing India’s labour regulation and boosting inclusive employment opportunities. 

Challenges & Considerations — What to Watch Out For

While the Code is a big step forward, its effective real-world impact depends on implementation:

State Variations: Though there is a national floor wage, actual minimum wages will vary by state depending on local conditions (cost of living, skill levels, work nature, etc.). This could still lead to regional wage disparities.

Enforcement & Compliance: For vulnerable, unorganised-sector workers — e.g. daily-wage labourers, migrants — enforcement of wage payment, wage slips, overtime pay, bonus eligibility will be critical to ensure protections aren’t just on paper.

Awareness: Workers, especially in rural/unorganised sectors, need awareness of their rights under the Code — many may not know about minimum wage, wage-slip provisions, or bonus eligibility.

Employer Adjustments: Employers need to restructure wage/allowance components carefully. Since “wages” now have a stricter definition (with 50% exclusion cap), salary structures that previously emphasized allowances/perks over basic pay may need overhaul — which may impact employer cost.

Why the Code on Wages Still Matters in 2025

With the recent implementation of major labour-law reforms (on 21 November 2025), including the Code on Wages, the timing is apt to understand the Code’s import. 

In a rapidly changing economy — with rise of informal work, gig economy, contract labour, small-business employment and cross-state workforce migration — a unified, clear, enforceable wage law is more relevant than ever.

The Code helps in achieving a balance between:

Worker protection & rights,

Employer clarity & stability,

Economic growth with social justice,

Formalization of workforce across sectors.

📌 Key Take-Aways — For Workers, Employers & Citizens

Stakeholder What They Should Know / Do

Workers (formal or informal, full-time or daily-wage) You now have legal right to minimum wage, wage slips, timely payments, overtime pay and bonus — irrespective of industry or employment type.

Employers / Businesses Need to review and possibly restructure salary/wage components; ensure compliance with minimum wage, overtime rates, bonus eligibility, documentation (wage slips), payment timelines.

Policy-makers & Civil Society Implementation and enforcement are key: ensure awareness drives, inspection mechanisms, grievance redressal and regular updates of minimum/floor wages based on living costs.

General Public / Workers’ Families Better wages and timely payments can improve household income security; wage transparency can protect vulnerable workers (migrants, unorganized labour) from exploitation.

Conclusion

The Code on Wages, 2019 represents a historic reform in India’s labour-law landscape. By consolidating old laws, standardizing definitions, and extending wage protections universally, it aims to bring fairness, transparency, and dignity to workers across sectors — while simplifying compliance for employers and supporting economic growth.

As India embarks on implementing this Code (alongside other labour codes) in 2025, its success — in improving lives, reducing inequality, and creating stable earnings — will depend heavily on earnest implementation, robust enforcement, and social awareness.

For workers and employers alike: understanding and adapting to the Code is not optional anymore — it is the new reality of India’s labour ecosystem.

Compliances by Small Companies Under the Companies Act, 2013

 

Key compliance requirements, exemptions, and procedures.

1. Understanding Small Companies

A Small Company is defined under Section 2(85) of the Companies Act, 2013 based on thresholds of paid-up capital not exceeding ₹4 crore and turnover not exceeding ₹40 crore. Exclusions apply to public companies, holding/subsidiary companies, Section 8 companies, and companies under special Acts.

2. Incorporation and Commencement of Business

Small companies follow the standard incorporation process using SPICe+ forms. Required steps include name reservation, registered office verification, first Board Meeting within 30 days, and filing of Form INC-20A declaring receipt of subscription money.

3. Key Exemptions Available to Small Companies

Major benefits include exemption from cash flow statements, abridged annual return (MGT-7A), simplified Board’s Report, exemption from CARO 2020, relaxed auditor appointment limits, and reduced internal audit applicability.

4. Mandatory Registers and Records

Small companies must maintain statutory registers including Register of Members, Register of Charges, Significant Beneficial Owners, and other prescribed registers at the registered office.

5. Share Capital and Securities Compliance

Compliances include issuing share certificates within statutory timelines, adherence to rules for bonus/right issues, prohibition on discounted share issuance (except sweat equity), and redemption norms for preference shares.

6. Meetings and Resolutions

Includes requirements for Board Meetings, AGMs, notice periods, quorum, special business explanatory statements, and filing of resolutions in Form MGT-14 wherever applicable.

7. Financial Statements and Annual Filings

Small companies file financial statements via AOC-4 and annual returns via MGT-7A. Cash flow statements are exempt. First auditor and subsequent auditors must be appointed as per statutory timelines.

8. Other Important Compliances

Includes deposit rules, charge registration, dividend declaration and transfer to unpaid dividend account, and obligations related to beneficial ownership filings.

9. MSME Udyam Registration

Small companies may register under Udyam for MSME benefits based on investment and turnover criteria. Classification includes Micro, Small, and Medium categories.

Corporate Social Responsibility (CSR) in India: Evolving Beyond Compliance

 

A Professional Insight

Introduction

Corporate Social Responsibility (CSR) has become a cornerstone of India's corporate governance framework. With Section 135 of the Companies Act, 2013, India became the first country to mandate CSR spending for eligible companies. Over time, CSR practices have evolved from philanthropic giving to structured, measurable and strategic interventions aligned with national priorities.

Legal Framework

CSR applies to companies meeting any of these criteria:
• Net worth of ₹500 crore or more
• Turnover of ₹1,000 crore or more
• Net profit of ₹5 crore or more

Such companies must spend at least 2% of the average net profits of the previous three years on CSR activities specified under Schedule VII of the Act.

CSR Accounting – Key Principles

Key principles include:
• CSR expenditure must be charged to the Statement of Profit and Loss.
• Unspent amounts for ongoing projects must be transferred to a designated account within 30 days.
• Unspent amounts for other projects must be transferred to a Schedule VII fund within 6 months.
• Excess CSR spending can be carried forward for 3 years.
• CSR done in kind must be valued at cost.
• Surplus arising from CSR cannot be treated as business income.
• Detailed disclosures must be made in the financial statements and Board’s Report.

Why CSR Matters

CSR is no longer just a compliance requirement. It helps businesses strengthen brand value, build community trust, foster employee engagement, support sustainable development, and contribute to India's national priorities including skill development, healthcare, environmental conservation, and digital empowerment.

Conclusion

India's CSR framework has transformed corporate participation in nation-building. With clear regulatory guidance and enhanced accountability, companies can integrate CSR into long-term strategy, ensuring meaningful and measurable impact on society.

Different Types of Notices and Their Time Limit Under Income Tax, 1961

Notices are generally issued under section 142(1), 142(1), 143(2), 148, 139(9) and 156 of the Income Tax Act,1961.

Section 142(1) - Inquiry Before Assessment

Notice under Section 142 is issued, to gather information from the taxpayer such as Books of accounts or documents, Other information in written form as required by the assessing officer.

This information might include statements of assets and liabilities, which are already part of accounts.

If the asseessee has not filed Income Tax Returns, this notice can be issued, requiring the assessee to file the returns within the specified time limit.

Therefore, it can be issued irrespective of whether the assessee has filed the income tax returns or not.

If the Assessing Officer is satisfied that the information submitted by the assessee is valid and complete, he may choose to discontinue the assessment proceedings at that stage.

The assessee should provide the information as requested by the assessing officer even if he opines that the information is irrelevant for the assessment procedures.

Time Limit of Issue of Notice u/s 142(1)

·       Time limit for notice under the following two situations are explained below

·       Notices issued for the production of books of accounts or information

·       Notices issued in case the return on income not filed

·       For Notices Issued for the Production of Books of Accounts or Information

The time limit is 3 years before the financial year.

E.g. If the notice is issued on 24-05-2025, it was issued in the previous year, 2024-25. The notice pertaining to the production of accounts should be pertaining to the year 2021-22 and not any earlier previous year.

For Notices Issued in Case the Return on Income not Filed

There is no explicitly mentioned time limit for the issue of notice u/s 142(1) in case the return on income is not filed.

Note:

The time limit for completing the assessment for section 143 is 12 months from the completion of the relevant assessment year.

So, it can be inferred that the notices should also be issued within the time limits for completion of the assessment.

Time Limit for Response to Notice

The assessee is required to file the return or necessary information within the time limit prescribed in the notice.

Section 143(1) - Intimation on Summary Assessment

What is Summary Assessment?

Simply speaking, summary assessment is the processing of the return.

Intimation on Summary Assessment

Under the act, it is not mentioned as ‘notice’ but as ‘intimation’. This notice is issued when the assessee has already filed the return on income. If the assessing officer finds certain inconsistencies, as mentioned below, he sends an intimation to the assessee. 

·       Any arithmetical error in the return;

·       Any claim which is incorrect on the face of it,

·       Losses of previous financial years for which the return is filed beyond the due date as per section 139(1)

·       Any expense disallowed in the Tax Audit Report and not disallowed in the income tax computation.

·       If any deduction is claimed under Chapter VI-A or section 10AA for the financial year in which the return is filed beyond the due date mentioned in section 139(1).

·       Usually, these inconsistencies are not found out of deep scrutiny; they are obvious inconsistencies that appear apparently.

·       The intimation can be issued if the return is filed under section 139(1) or 142(1).

Time Limit for Notice u/s 143(1)

Notice under section 143(1) cannot be sent by the assessing officer after 9 months from the end of the financial year in which the return is filed.

For example, the return of income is filed for FY 2024-25. End of the financial year is 31-03-2025. 9 months from the end of financial year is 31-12-2015. It is the last date for issuing intimation u/s 143(1) in this case.

Time Limit for Response to Notice

The assessee is supposed to file a response to the intimation received within 30 days of the date the intimation is issued.

If the Assessee files the Response Within 30 Days

His responses will be considered for the computation of income by the assessing officer. The assessing office would verify the correctness and validity of responses received before giving effect to the inconsistencies noted.

If the Assessee files no Response Within 30 Days

The assessing officer will proceed, giving effect to the inconsistencies noted. It might also result in penal consequences under section 271 or prosecution proceedings under section 276D, which might also result in imprisonment.

Section 143(2) - Notice on Scrutiny Assessment

What is Scrutiny Assessment?

This notice is issued when the assessee has not provided any information or when the assessing officer is not satisfied with the information provided by the assessee.

This notice might ask you the profit of tax deductions, and exemptions claimed and further information about the profits computed, enabling the officer to conduct a further detailed enquiry.

This is called scrutiny assessment.

Notice under Scrutiny Assessment

The assessing officer might require the assessee to furnish evidence to perform a scrutiny assessment. In this case, he issues a notice under section 143(2).

Time Limit for the Issue of Notice u/s 143(2)

3 months from the end of the relevant financial year on which the return on income is furnished.

For example, the Return was furnished on 19/02/2025. The financial year ends on 31 March 2025, so the notice needs to be issued by 30 June 2025.

Time Limit for Response to Notice

The response should be submitted by the assessee within the time limit specified in the notice.

Consequence of Non-Compliance of Time Limit

Penal consequences under section 271.

The assessing officer would proceed to assess the income himself, based on whatever information is available. He would demand tax from the assessee as per his calculation, without providing any opportunity for the assessee to explain. This is called the Best Judgement Assessment u/s 144.

Note: Anyway, we can make a requisition under section 119(2) to the CBDT to relax the time limit. The assessing officer can relax the time limit at his discretion.

Section 148 - Notice on Income Escaping Assessment

What is Income Escaping Assessment?

The assessee would not have furnished certain income in the returns and it would have been missed out by the assessing office on his regular assessment. In this case, the assessing officer has the power to re-assess the income of the assessee in the particular financial year.

It could also be that the assessing officer has not conducted any assessment on the return under question, and the time limit for normal assessment under section 143 has elapsed. In these situations, he has the power to re-open the return under question and conduct assessment.

This is the concept of income escaping assessment.

Notice on Income Escaping Assessment

A Show Cause Notice is issued to the assessee, allowing him to explain himself under section 148A. If the assessing officer is still unsatisfied, a notice under section 148 is issued.

It is to be noted that notice for income escaping assessment can be issued only when the assessing officer has information indicating that the income has escaped the assessment.

Notice under this section cannot be issued for cases that are already under an appeal.

Illustration: Notice u/s 148 is issued on 15th January 2025. The end of Jan is 31st Jan. 3 months from 31st Jan - 30th April 2025. Return to be within 30th April 2025.

 

Time Limit for Issue of Notice Under Section 148

Particulars	Upto 31st August 2024	After 31st August, 2024
Normal Cases	3 years from the end of the Relevant Assessment Year	3 years and 3 months from the end of the Relevant Assessment Year
	Example: For income of Rs.30,00,000 escaped in FY 2020-21, Relevant Assessment Year is Rs.2021-22. Since this is before 31st August 2024, the time limit is 31st March, 2025
Specified Cases	10 years from the end of the Relevant Assessment Year.	5 years and 3 months from the end of the Relevant Assessment Year
	Example: For income of ₹60,00,000 escaped in FY 2020-21, Relevant Assessment Year is 2021-22. Since this is before 31 August 2024, the time limit is 31 March 2032.              Example: For income of ₹60,00,000 escaped in FY 2024-25, the Relevant Assessment Year is 2025-26. Since this is after 31 August 2024, the time limit is 31 March 2031.

Normal Cases: If the income escaped assessment is less than ₹. 50 Lakhs as per the information available with the Assessing Officer

Specified Cases: If the income escaped assessment is ₹. 50 Lakhs or more as per the information available with the Assessing Officer.

Time Limit for Response to Notice

In the notice under section 148, the assessing officer requires the assessee to file a return of income within 3 months from the end of the month the notice is issued.

Consequence of Non-Compliance of Time Limit

Best Judgment Assessment u/s 144.

However, the assessee can make a requisition under section 119(2) to the CBDT for a relaxation of the time limit. The assessing officer can relax the time limit at his discretion.

Section 156 - Demand Notice

At the end of the assessment by the assessing officer, an assessment order is passed, determining the amount of tax, interest, and penalty payable by the assessee. Wherever it is found that an amount is recoverable from the assessee as tax, interest, and penalty, the assessing order must be sent along with a demand notice.

Time Limit for Response to Notice

The assessee should pay the demand notice within 30 days of the notice. In exceptional cases, the assessing officer, with the prior approval of the Joint Commissioner, can reduce or extend the period or allow payment by instalment.

If the assessment order is not accompanied by a demand notice, the assessee does not need to pay tax, interest, or penalty.

Consequence of Non-Compliance of Time Limit

Interest at 1% per month or part thereof if the payment is not made within 30 days.

Penalty as imposed by the assessing officer.

Section 139(9) - Defective Notice

After the assessee files the return of income, when the assessing officer finds the return filed defective, he sends an intimation to the assessee. Therefore, the assessee is provided with an opportunity to rectify the defect.

Time Limit for Response to Notice

In normal cases, the assessee should file a response to the intimation within 15 days of the issue of notice.

However, the assessee can request the assessing officer to relax the time limit, and the assessing officer has the discretion to do so.

Consequence of Non-Compliance of Time Limit

If the assessee does not file a response within the specified time limit, the return that was filed will be treated as invalid. It will be considered as if the assessee has not filed a return at all.

 

New ITR-B Form Introduced for Block Assessments Post Income Tax Search

 In a significant move aimed at streamlining post-search tax disclosures, the Income Tax Department has introduced a new return form – ITR-B. This form is to be used by individuals or entities who wish to disclose undisclosed income unearthed during income tax search or requisition operations conducted on or after September 1, 2024.

As per a recent notification from the Central Board of Direct Taxes (CBDT), the ITR-B form is required to be filed under clause (a) of sub-section (1) of section 158BC of the Income Tax Act. It is specifically linked to searches initiated under section 132 or requisitions made under section 132A on or after the mentioned date. The form must be duly verified as prescribed by the authorities.

According to tax experts, Form ITR-B aims to resolve several procedural ambiguities that existed around block assessments. Unlike conventional ITR forms that require extensive disclosures, ITR-B focuses on limited and specific data relevant to the block assessment period. This targeted approach reduces the compliance burden on taxpayers while ensuring accurate and transparent reporting.

This development marks a step forward in promoting efficiency and clarity in the tax system, especially for those undergoing post-search assessment proceedings.

Important Changes in Income tax effective from 1st April, 2025

 

Changes in TDS Rates and Limits, effective from 1st April 2025 - Comparative Chart:

Category	Previous TDS Rate/Limit	New TDS Rate/Limit	Remarks
Pre-mature withdrawals from EPF (192A)	₹50,000	₹1,00,000	TDS exemption limit raised from ₹50,000 to ₹1,00,000
Interest on Deposits (194A)	₹40,000         (general citizens) ₹50,000           (senior citizens)	₹50,000         (general citizens) ₹1,00,000        (senior citizens)	TDS exemption limit increased for general citizens. Banks will deduct TDS if annual interest exceeds ₹50,000 and for senior citizens if annual interest exceeds ₹1,00,000.
Rent Payments (194I)	₹2,40,000               per year	₹6,00,000                per year	TDS exemption limit raised, reducing tax deductions at source for rent payments.
Insurance Commission (194D)	₹15,000	₹20,000	TDS threshold for insurance commission increased, providing relief to insurance agents.
Professional fees and technical services (194J)	₹30,000	₹50,000	Raised exemption limit, reducing tax deduction on work of professionals, freelances and others.
Dividend Income (194)	₹5,000	₹10,000	TDS exemption limit for dividends raised, benefiting investors in equities and mutual funds.
Lottery Winnings and Horse Race Bets (194B&194BB)	Aggregate annual winnings exceeding ₹10,000	Single transaction exceeding ₹10,000	TDS now deducted only when a single transaction exceeds ₹10,000, simplifying the process.
Higher TDS for non-filers (206AB &206CCA)	Twice the rate applicable or 5% whichever is higher	Omitted	No TDS at higher rate applicable
Remittances Abroad (LRS)	TCS of 20%       (other purposes) TCS of 5%               (education and medical)                    on amounts over ₹7,00,000 per year   Overseas tour package: Up to ₹7 lakh TCS @ 5% Above ₹7 lakh TCS @ 20%	TCS of 20%               (other purpose)                   TCS of 5% (education and medical purposes) on amounts over ₹10,00,000 per year.   Overseas tour package: Up to ₹10 lakh TCS @ 5% Above ₹10 lakh TCS @  20%	Increase in Tax Collected at Source (TCS) rate for foreign remittances under the Liberalized Remittance Scheme (LRS).

 

 

Important changes under Income Tax Act in the case of Partnership firms and LLPs, effective from 1^st April, 2025

Particular	Up to 01.04.2025	From 01.04.2025 onwards
Tax rate	Both were taxed at a flat rate of 30%. If income exceeded Rs. 1 Crore then there was a surcharge of 12%.	Still flat rate is same as previous periods i.e. at 30%. If income exceeded Rs. 1 Crore, surcharge rate has been increased to 15%.
Deductible remuneration to working partner	For first ₹3,00,000 of book profit: Higher of ₹1,50,000 or 90% of book profit   On remainder of book profit:  60% of book profit	For first ₹ 6,00,000 of book profit: Higher of ₹.3,00,000 or 90% of book profit   On remainder of book profit:  60% of book profit
TDS	No TDS was required to be deducted on remuneration of partners.	New Section 194T has implemented TDS to be deducted @10% on partner’s remuneration if payment exceeds Rs. 20,000 in a financial year.
Disclosure Requirements have been increased	Only Standard financial disclosures were sufficient	Firms are  now required to furnish detailed partner-wise income, capital contributions, Related party transactions, Asset Liability Details, Contingent Liabilities, Guarantees and Commitments and Investment Details.

 

Changes in tax slabs, rebates and  provisions for updated returns

Income (A.Y. 2026-27)	Tax rate       (A.Y. 2026-27)	Income (A.Y. 2025-26)	Tax rate           (A.Y. 2025-26)
Up to ₹4,00,000	0%	Up to ₹3,00,000	0%
₹4,00,001-₹8,00,000	5%	₹3,00,001-₹7,00,000	5%
₹8.00.001-₹12.00.000	10%	₹7,00,001-₹10,00,000	10%
₹12,00,001-₹16,00,000	15%	₹10,00,001-₹12,00,000	15%
₹16,00,001-₹20,00,000	20%	₹12,00,001-₹15,00,000	20%
₹20,00,001-₹24,00,000	25%	Above ₹15,00,000	30%
Above ₹24,00,000	30%

• By availing the rebate under section 87A, a person earning income up to ₹12 Lakhs, shall have to pay NIL tax.
• Standard deduction for salaried employee is now of ₹75,000 (previously it was  ₹50,000).
• Relaxation of deemed let out property rule, allowing up to two properties to be declared as self occupies.
• Taxpayers can file updated return u/s 139(8A) within 48 months from the end of relevant assessment year (previously it was within 24 months from the end of relevant assessment year year)