The Taxation Laws (Amendment) Act, 2025 received Presidential assent on August 21, 2025. The law introduces important changes to the Income-tax Act, 1961 and the Finance Act, 2025, with a focus on pension taxation, exemptions for sovereign wealth funds, and revised provisions for block assessments following search and requisition proceedings.

• Income-tax Act, 1961

• Section 10: Introduces exemptions for lump-sum payments and partial withdrawals from the Unified Pension Scheme (UPS) under the National Pension System Trust, aligning tax treatment with the January 2025 DFS notification. It also adds exemptions for investments by Saudi Arabia’s Public Investment Fund and its wholly owned subsidiaries.
• Section 16: Expands standard deduction applicability by including reference to clause (iii) in the proviso to section 16(ia).
• Section 80CCD: New provisions introduced for UPS subscribers:
  • Section 80CCD(3A): Any amount received on retirement/superannuation/voluntary retirement shall be taxable in the year of receipt, unless transferred to a pool corpus.
  • Section 80CCD(6): Clarifies that transfer to pool corpus is not treated as receipt.
  • Explanation updated to define “pool corpus” and “individual corpus” per DFS notification.

• Finance Act, 2025
• Section 49: Retrospectively from September 1, 2024, it substitutes sub-section (2) to provide that all pending assessments, reassessments, or recomputations for years falling within the block period shall abate on initiation of search/requisition. Proceedings initiated post-search but before conclusion under section 158BC will also abate.