The Union Finance Minister Nirmala Sitharaman presented the Union Budget of 2025 before the parliament on Saturday at 11 AM. This is the eighth time the FM has presented her budget, which is indeed a record for an Indian FM. Major amendments have been proposed to be made to Section 206C of the Income Tax Act for the same.
A positive move brought in the budget includes the exclusion of limitation periods for passing income tax orders.
It should be appreciated that the budget has been drafted keeping in mind that the flexibility in policymaking is the need of the hour. The minister also said that she will be presenting the new Income Tax Bill next week.
Union Budget 2025: In-Depth Analysis for Strategic Insights – Click here to know more
Earlier, in a judgment passed by Abinav Jindal v. Assistant Commissioner of Income Tax Circle 521, which passed in January 2025, the Delhi High Court Had ruled that the Income Tax Department cannot issue a fresh reassessment notice beyond the prescribed limitation period if the initial notice under Section 148 of the Income Tax Act, 1961, was issued without following due procedure. The court noted that the time spent on earlier litigation cannot be excluded for computing the limitation period.
To know more read: Revenue cannot extend Reassessment Notice Period Due to Earlier Litigation Delays: Delhi HC
But in the Finance Bill 2025, it has been stated that Excluding the period such as court stay etc. for calculating time limit to pass an order under Sub-section (7A) of section 206C of the Act provides that no order shall be made deeming a person to be an assessee in default for failure to collect the whole or any part of the tax from any person, after the expiry of six years from the end of the financial year in which tax was collectible or two years from the end of the financial year in which the correction statement is delivered under sub-section (3B) of section 206C of the Act, whichever is later.
Union Budget 2025: In-Depth Analysis for Strategic Insights – Click here to know more
While computing the time limit under sub-section (7A) of section 206C of the Act, the exclusion of the time period such as the period for which an order of any court stayed proceedings, etc. is required to be provided.
It was suggested that section 206C of the Act’s subsection (7A) be changed to state that the pertinent provisions of section 153 of the Income Tax Act would be applicable throughout the time frame specified in section 206C of the Act’s subsection (7A).
The amendment will take effect from the 1st day of April 2025.
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