In a move to simplify India’s direct tax laws, the Indian government has withdrawn the Income-Tax Bill, 2025, which was originally introduced on February 13. A new and revised version of the bill is set to be tabled on August 11.
Thank you for reading this post, don't forget to subscribe!The decision to withdraw the initial draft came after a Select Committee, led by Baijayant Panda, proposed numerous amendments. To avoid confusion from these changes, the government opted to withdraw the first bill and present a consolidated version for debate.
What’s Changed in the New Version?
The new bill retains the original goal of simplifying and modernizing the tax code. It aims to reduce legal disputes and align scattered tax provisions into a more coherent structure. The revised draft focuses on clarity to ensure there is no ambiguity.
Key features of the revised bill include:
- Simplified Language: The bill uses shorter, clearer provisions and fewer provisos. It also consolidates similar deductions to make compliance easier.
- Taxpayer-Friendly Measures: The bill proposes lower penalties for certain offenses to create a more taxpayer-friendly system.
- No Tax Rate Changes: Existing tax slabs, capital gains rules, deadlines, and income classifications will remain unchanged.
- Reduced Litigation: The revised bill adopts a “trust first, scrutinize later” approach and removes over 300 outdated provisions.
- Modern Administration: The Central Board of Direct Taxes (CBDT) will have enhanced powers to frame rules and deploy digital monitoring. The bill also introduces a unified “tax year” concept to eliminate confusion between financial and assessment years.
The new bill is more structured than the Income-tax Act, 1961, and uses tables and formulas to simplify interpretation. The government asserts that the revised language only clarifies existing powers and does not introduce new legal authority.
