Power to rescind exemption in relation to certain Union territories already granted under section 294A of the Income-tax Act, 1961
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Where the Central Government considers it necessary or expedient so to do may, by general or special order, rescind an exemption, reduction in rate or other modification in respect of income-tax or super-tax in favour of any assessee or class of assessees or in regard to the whole or any part of the income of any assessee or class of assesses, made as per the provisions of section 294A of the Income-tax Act, 1961.
FAQs on Section 531 of the Income Tax Act 2025
What is Section 531 of the Income Tax Act, 2025?
Section 531 grants the Central Government the power to rescind exemptions, reductions in tax rates, or other modifications related to income-tax or super-tax for certain Union Territories, as per Section 294A of the Income-tax Act, 1961.
When does Section 531 come into effect?
Section 531 will be effective from April 1, 2026, for the tax year 2025-26.
Who has the authority to rescind exemptions under Section 531?
The Central Government has the power to issue general or special orders to withdraw tax exemptions or modifications granted earlier under Section 294A of the Income-tax Act, 1961.
Which areas or taxpayers are affected by this provision?
This section specifically applies to certain Union Territories and affects taxpayers who previously enjoyed exemptions or reduced tax rates under Section 294A.
Can exemptions be withdrawn for a specific taxpayer or class of taxpayers?
Yes, the government may rescind exemptions for an individual taxpayer, a class of taxpayers, or for specific portions of their income.
Why was Section 531 introduced?
It allows the government to review and withdraw tax benefits if deemed necessary for fiscal or economic reasons, ensuring a uniform and equitable tax system.
Will this impact existing tax exemptions in Union Territories?
Yes, any previously granted exemptions under Section 294A may be withdrawn through a government order.
How will taxpayers know if an exemption is rescinded?
The Central Government will issue a general or special order specifying the changes. Taxpayers should stay updated through official government notifications.
What should affected taxpayers do if their exemption is rescinded?
They must recalculate their tax liabilities based on the revised rules and comply with the updated tax rates applicable to them.
Section 531 of the Income Tax Act, 2025, effective from April 1, 2026, grants the Central Government the authority to rescind tax exemptions, reductions, or modifications previously granted under Section 294A of the Income-tax Act, 1961, for certain Union Territories.
This can apply to individual taxpayers, specific classes of taxpayers, or portions of their income through a general or special order. The provision ensures fiscal flexibility by allowing the government to withdraw benefits when necessary. Taxpayers affected by such changes must stay updated with official notifications and comply with revised tax liabilities.
