Revised Income Tax Bill 2025: The Central government is set to introduce a revised Income Tax Bill in the Lok Sabha on August 11, incorporating several key changes recommended by a parliamentary panel to simplify the decades-old tax law and ease compliance for individuals and businesses.
Finance Minister Nirmala Sitharaman on Friday formally withdrew the February version of the bill, first tabled during the budget session, after the BJP leader Baijayant Panda-led Select Committee of Parliament suggested 566 amendments in its 4,584-page report.
The move came amid opposition uproar in the House.
The new draft based largely on the committee’s recommendations aims to cut the size and complexity of the 1961 Act by nearly 50 per cent, replacing archaic legal terms with simpler language, tightening definitions, and eliminating ambiguities.
Also Read: Income Tax Bill 2025: Finance Minister withdraws Income Tax Bill in Lok Sabha; new version to be tabled on August 11
Income Tax Bill 2025 | Here’s the key proposed changes:
Relief on tax refunds: Removal of the provision that denied income tax refunds if returns were filed after the due date. Taxpayers will be allowed to claim refunds without penalty, even for late filings.
Anonymous donations: Purely religious trusts will be exempt from tax on anonymous donations, but trusts running social services such as hospitals or schools alongside religious activities will not get this relief.
Obtaining a nil TDS certificate: There can be an implementation of measures so that taxpayers can get the nil TDS certificate more easily.
Transparency for assessments: Assessing officers act only after the issuance of notices and consideration of the taxpayers’ responses in a bid to curb arbitrary assessments.
Digital-first tax process: More automation and faceless proceedings shall be prepared for ease and curb corruption.
The bill also raises the income threshold for tax rebate under section 87A of the Act from Rs 7 lakh to Rs12 lakh for those under the new tax regime, with the maximum rebate amount increased from Rs 25,000 to Rs 60,000. Marginal relief will apply to incomes slightly above Rs 12 lakh.
Panda said the revised law would “significantly benefit small business owners and MSMEs, who often lack the legal and financial expertise to navigate complicated tax structures.” He added that the reform would create a fairer system without adding extra tax burden on the working and middle class.
The July 2024 budget announced a complete overhaul of the Income-tax Act, 1961, which has been amended over 4,000 times and now runs to over five lakh words. The new legislation will replace it with a concise, structured framework of 23 chapters, 536 sections and 16 schedules, making filing taxes “far easier for ordinary citizens,” according to the government.
If passed, the new Income Tax Bill is expected to boost household consumption, savings and investment by leaving more disposable income with taxpayers.
