Income Tax Bill 2025: Parliamentary Panel Wants More Power for Tax Officials, Keeps CA-Only Rule for Tax Audit

Income Tax Bill 2025: Parliamentary Panel Wants More Power for Tax Officials, Keeps CA-Only Rule for Tax Audit

A Parliamentary panel has completed reviewing the draft of the Income Tax Bill, 2025, and has suggested some significant amendments aimed at redefining the powers of income tax officers, especially in areas related to gathering evidence and conducting investigations.

The committee has also updated the definition of “associated enterprises”. These amendments are meant to close loopholes and ensure that such relationships are properly covered in compliance with the tax rules. However, it is not recommended to include company secretaries or cost accountants in the definition of ‘accountant’.

The Select Committee adopted its final report on Wednesday. This report will now be submitted to the Speaker of the Lok Sabha, after which the government will decide whether to accept the suggested changes. If the government agrees, the Union Cabinet will approve the amendments, and the amended Bill will be introduced in Parliament during the Monsoon Session, effective on July 21.

However, the committee has not suggested any amendments to expand the definition of “accountant”. In accordance with the present law, an accountant is defined only as a Chartered Accountant (CA) who possesses a valid certificate of practice, as per the Chartered Accountants Act, 1949. This means that Cost Accountants and Company Secretaries will continue to be out from this definition.

Previously, numerous professional bodies representing cost accountants and company secretaries had raised arguments for being left out. They stated that they should also be defined as accountants under the new law. However, the Institute of Company Secretaries of India did not accept their demand, and the committee in the end decided to stick with the current definition.

According to sources, the committee’s main focus was not to make big amendments but to fine-tune and simplify the language used in the Bill. Most of the changes suggested are related to clarity in definitions, streamlining procedures, and strengthening anti-tax avoidance measures.

A major addition is reportedly made to Section 246 of the Bill. Under this, the panel has recommended that income tax authorities be given powers similar to those of a civil court under the Code of Civil Procedure, 1908, especially in cases where they are handling investigations. This would give them more authority to summon individuals, request documents, and conduct formal enquiries.

The panel has also refined the definition of “associated enterprise” to ensure that it clearly includes any business or company that is directly or indirectly involved in managing, controlling, or owning another company, either by itself or through intermediaries.

Specifically, a company will be considered as an “associated enterprise” if it meets the following conditions:

• If it owns at least 26% of the voting shares in another company.
• If it gives a loan that makes up 51% or more of the total book value of the other company’s assets.
• If it guarantees 10% or more of the other company’s total borrowings.