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Chapter IV-E of the Income-tax Act 2025 introduces several subtle drafting changes regarding capital gains, creating significant interpretive nuances. First, Section 67(7)(c) recasts period-of-holding rules, potentially permitting assessees to select FIFO or LIFO for unlisted DEMAT shares. Second, Section 70(1) replaces "as stock-in-trade" with "not being stock-in-trade", narrowing exemption exceptions in parent-subsidiary transfers. Third, Section 85 modifies long-term capital gains terminology, effectively displacing the V.S. Dempo precedent for depreciable assets. Lastly, Section 73 omits direct references to the 1961 Act, creating cost-of-acquisition ambiguities during statutory transition. These provisions highlight gaps requiring judicial or legislative clarification for smooth statutory operation.
INTRODUCTION
The Income-tax Act, 2025 (2025 Act) has come into force with effect from 1 April 2026. It has been consistently stated that the 2025 Act has been enacted to simplify the law relating to income-tax as contained in the Income-tax Act, 1961 (1961 Act), thereby indicating that the exercise was intended to restate and simplify the law in a more accessible form, rather than to introduce substantive policy changes.<
