After withdrawing the Income Tax Bill on Friday, August 8, Finance Minister Nirmala Sitharaman today (August 11) introduced a new Bill named The Income-Tax (No.2) Bill, 2025. The Bill has been passed by the Lok Sabha.
A 31-member Select Committee led by BJP MP Baijayant Panda had proposed several amendments to the law. Despite protests from the opposition, the House had accepted the bill’s withdrawal.
On July 21, the first day of the current Monsoon session of Parliament, the report of the parliamentary panel on the new Income-Tax Bill was presented in Lok Sabha. In its report, the panel has suggested important changes to tighten definitions, remove ambiguities, and align the new law with existing frameworks.
The Committee, in its 4,584-page report, had identified several drafting corrections based on stakeholder suggestions, which they believe are essential for clarity and unambiguous interpretation of the new bill. The parliamentary panel had made a total of 566 suggestions/recommendations in its report.
To give significant relief to taxpayers, the committee had suggested changing the provision that disallows refunds if income tax returns are filed beyond the due date.
The new Income-Tax Bill passed without debateÂ
The new Income-Tax Bill was passed without debate amid opposition protests over their demand for debate on Special Intensive Revision (SIR) of electoral rolls in Bihar. Both Lok Sabha and Rajya Sabha have witnessed continuous disruptions since the beginning of the monsoon session of Parliament over the opposition demand.
Introduction of the new Bill
The Government had introduced the Income Tax Bill, 2025, in the Lok Sabha on February 13, 2025, and it was referred to the Select Committee for examination.
The Select Committee laid its report in the Lok Sabha on July 21, 2025. The new and amended bill also incorporates suggestions from stakeholders about changes that would convey the proposed legal meaning more accurately.
There were corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing and the government decided to withdraw the Income-tax Bill, 2025 and bring the Income Tax (No. 2) Bill, 2025.
New Bill replaces Income-tax Act, 1961
The new bill replaces the Income-tax Act, 1961, which has been subjected to numerous amendments since its passage more than sixty-four years ago.
As a result of these amendments, the basic structure of the Income-tax Act had been overburdened and language has become complex, “increasing compliance for taxpayers and hampering efficiency of tax administration”.
The Objects and Reasons of the bill states that taxpayers, practitioners and tax administrators had also raised concerns about the complicated provisions and structure of the Income-tax Act 1961.
Also Read: Income Tax Bill 2025: Finance Minister withdraws Income Tax Bill in Lok Sabha; new version to be tabled on August 11
With inputs from agencies
