Definition of Income Government Scheme Waivers and the Income Tax Net : An Analysis of section 2(24)(xviii)

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The Tax Publishers Income Tax--Definition of Income Government Scheme--Waivers and the Income Tax Net : An Analysis of section 2(24)(xviii) Pawan Prakash In recent years, the tax treatment of waivers and concessions granted under government schemes has undergone a decisive shift. Section 2(24)(xviii) of the Income Tax Act, 1961 (Hereinafter referred to as the 'Act') inserted by the Finance Act, 2015 has broadened the definition of 'income' to bring within its fold a wide spectrum of assistance from the government, including subsidies, grants, and waivers. While the amendment was intended to plug perceived loopholes in the taxation of such benefits, it has also altered the long-settled debate over whether certain waivers, particularly those connected to capital assets, should be treated as non-taxable capital receipts. This article traces the legislative context, judicial trends, and compliance implications, illustrating the principles through the recent ruling in Oricon Enterprises Ltd. v. DCIT [ITA No. 2810/MUM/2024 and ITA No. 2811/MUM/2024, dt. 16-6-2025] :2025 TaxPub(DT) 4886 (Mum-Trib). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Definition of Income

Government Scheme--Waivers and the Income Tax Net : An Analysis of section 2(24)(xviii)

Pawan Prakash

In recent years, the tax treatment of waivers and concessions granted under government schemes has undergone a decisive shift. Section 2(24)(xviii) of the Income Tax Act, 1961 (Hereinafter referred to as the 'Act') inserted by the Finance Act, 2015 has broadened the definition of 'income' to bring within its fold a wide spectrum of assistance from the government, including subsidies, grants, and waivers. While the amendment was intended to plug perceived loopholes in the taxation of such benefits, it has also altered the long-settled debate over whether certain waivers, particularly those connected to capital assets, should be treated as non-taxable capital receipts. This article traces the legislative context, judicial trends, and compliance implications, illustrating the principles through the recent ruling in Oricon Enterprises Ltd. v. DCIT [ITA No. 2810/MUM/2024 and ITA No. 2811/MUM/2024, dt. 16-6-2025] :2025 TaxPub(DT) 4886 (Mum-Trib).