The Government of India has officially notified The Taxation Laws (Amendment) Act, 2025 (No. 29 of 2025), following the assent of the Hon’ble President. The Act seeks to amend provisions of the Income-tax Act, 1961 and the Finance Act, 2025, bringing significant changes to pension taxation, exemptions, and assessment procedures.
Key Highlights:
- Income-tax Act Amendments
- Section 10 Exemptions
- Tax exemption introduced for payments from the National Pension System (NPS) Trust to subscribers of the Unified Pension Scheme (UPS), up to 60% of the individual corpus at superannuation or voluntary retirement.
- Lump-sum amounts received under the Unified Pension Scheme are also exempt.
- Inclusion of Saudi Arabia’s Public Investment Fund and its wholly owned subsidiaries as eligible for certain tax exemptions.
- Section 16 (Salaries)
- Additional relief under standard deduction, expanding applicability from clause (ii) to also include clause (iii).
- Section 80CCD (Pension Scheme Deductions)
- New provision (Section 80CCD(3A)): Amounts received on retirement from the Unified Pension Scheme will be taxable as income in the year of receipt.
- Clarification on transfers to “pool corpus” (not treated as receipt, hence not taxable).
- Definitions of “pool corpus”, “individual corpus”, and salary clarified.
- Finance Act, 2025 Amendment
- Section 49 – Search & Requisition Proceedings
- Assessments or reassessments pending at the time of a search (Sec. 132) or requisition (Sec. 132A) will abate automatically.
- Proceedings for years falling in the “block period,” for which notices were already issued, will also abate upon initiation of search/requisition, except for the year in which the last authorization is executed.
Legislative Process
- The Bill was passed by both Houses of Parliament as a Money Bill.
- Received Presidential assent on August 21, 2025.
- Notified in the Gazette of India (Extraordinary), Part II, Section 1.
This Amendment marks a major step in aligning pension taxation with the new Unified Pension Scheme and simplifying tax treatment of search assessments.
The Complete Act can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/08/THE-TAXATION-LAWS-AMENDMENT-ACT-2025.pdf
