Comparison of Section 515(3)(b)(G) of the New Income Tax Bill 2025 with Explanation to Section 288 of the Income Tax Act, 1961

Introduction

Income Tax Bill 2025 Vs Income Tax Act 1961

The Income Tax Law 2025 introduces several changes, including Section 515(3)(b)(G), which pertains to the disqualification of an "Accountant" in certain cases. This provision can be compared with the Explanation to Section 288 of the Income Tax Act, 1961, which specifies disqualifications for an accountant acting as an authorized representative.

A significant issue arises due to the removal of the word "Provided" in the new law, which changes the meaning of the provision entirely.

Key Comparisons

Aspect	Section 515(3)(b)(G) – IT Law 2025	Explanation to Section 288 – IT Act 1961
An Individual, Who or His Relative or Partner	an individual, who or his relative or partner	an individual who, or his relative or partner
Holding Security/Interest in Assessee	is holding any security of, or interest in, the assessee and the face value of such security or interest held by his relative does not exceed one lakh rupees	is holding any security of, or interest in, the assessee: Provided that the relative may hold security or interest in the assessee of the face value not exceeding one hundred thousand rupees
Indebted to the Assessee	is indebted to the assessee, and such debt in case of his relative does not exceed one lakh rupees	is indebted to the assessee: Provided that the relative may be indebted to the assessee for an amount not exceeding one hundred thousand rupees
Given Guarantee or Provided Security	has given a guarantee or provided security in connection with the indebtedness of a third person to the assessee and such relative gives a guarantee or provides security for an amount not exceeding one lakh rupees	has given a guarantee or provided any security in connection with the indebtedness of any third person to the assessee. Provided that the relative may give guarantee or provide any security in connection with the indebtedness of any third person to the assessee for an amount not exceeding one hundred thousand rupees

Impact of the Change

1. Unintended Reversal of Threshold Interpretation

• IT Act 1961 (Old Law - Section 288 Explanation):

  • Allowed an accountant if the relative’s interest, indebtedness, or guarantee did not exceed ₹1 lakh.

  • If the limit exceeded ₹1 lakh, the accountant was disqualified.

    
    

• IT Law 2025 (New Law - Section 515(3)(b)(G)):

  • The word "Provided" is removed, changing the interpretation.

  • Now, holding/indebtedness/guarantee up to ₹1 lakh disqualifies the accountant, while holding above ₹1 lakh does not disqualify.

  • This contradicts the original intent of restricting financial involvement to prevent conflict of interest.

    
    

2. Possible Legislative Drafting Error

• It appears that the government copied the provision from the earlier law but removed the "Provided" clause without realizing its impact.

  
  

This accidental omission reverses the meaning, potentially allowing larger financial relationships that should ideally be restricted.