Income Tax Bill 2025 Set to Be Tabled in Parliament on August 11
Thank you for reading this post, don't forget to subscribe!The Income Tax Bill, 2025, a landmark legislative proposal aimed at modernizing and simplifying India’s tax laws, is scheduled to be tabled in Parliament on August 11. This follows its initial introduction by Finance Minister Nirmala Sitharaman on February 13, 2025. The new Bill is designed to replace the existing Income Tax Act of 1961, with a focus on reducing litigation, enhancing clarity, and making compliance easier for taxpayers.
Key Features of the Proposed Bill:
- Streamlined Structure: The new legislation is significantly more concise. It reduces the number of sections from 819 to 536 and chapters from 47 to 23. The total word count has been nearly halved, dropping from 5.12 lakh to 2.6 lakh words. While the number of tables has increased from 18 to 57, the Bill removes over 1,200 provisos and 900 explanations, simplifying the text for better understanding.
- Simplification of Tax Year: A major change proposed is the replacement of the “previous year” and “assessment year” with a single “tax year.” This aims to eliminate the two-step terminology, where income earned in one financial year is taxed in the next, thereby aligning the tax filing process with a single-year structure.
- Modernization and Compliance: The Bill incorporates provisions for digital documentation, clearer compliance guidelines, dispute resolution frameworks, and international taxation standards, aligning the tax system with current economic realities.
Select Committee Recommendations:
A Select Committee of the Lok Sabha, chaired by BJP MP Baijayant Panda, submitted its report on the draft Bill on July 21. The committee, which included 31 MPs, made 285 recommendations, some of which are:
- Updated Definitions: Recommendations were made to revise definitions of terms like “capital asset” and “micro and small enterprises” to ensure consistency with other laws.
- Relief for Taxpayers: The committee suggested a more equitable formula for calculating deductions on house property income and proposed allowing loss carry-forwards despite temporary shareholding changes, benefiting small investors and entrepreneurs.
- Support for Startups and ESG: The panel recommended clearer tax rules for R&D investments, tax relief for businesses managing biodegradable waste, and a clearer classification of terms like “parent company” in appeals.
- Taxpayer Protection: To reduce litigation, the committee suggested reinstating phrases like “in the circumstances of the case.” It also recommended that small taxpayers with incomes below the taxable limit should not be compelled to file returns solely to claim refunds.
The final tabling of the Bill on August 11 is highly anticipated, as it represents what could be the most significant tax reform in over six decades.
