New Income-Tax Bill 2025: A Major Overhaul for Taxpayers
Thank you for reading this post, don't forget to subscribe!The revised Income-Tax (No. 2) Bill, 2025, approved by the Lok Sabha, is set to replace the decades-old Income-Tax Act of 1961. The new legislation aims to simplify India’s direct tax framework with several key changes.
Key Reforms
- MAT and AMT Distinction: The bill clearly separates Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT). MAT will apply exclusively to companies, while AMT will be limited to non-corporate entities claiming deductions.
- LLP Exemption: To ease the compliance burden, Limited Liability Partnerships (LLPs) with income only from capital gains are now exempt from AMT.
- Wider E-payment Mandate: The ₹50 crore threshold for mandatory electronic payments has been expanded to include professional practices such as legal, medical, and consultancy firms, increasing transparency in high-value transactions.
- Refund Flexibility: A pro-taxpayer measure, the bill removes rigid timelines for filing refund claims, allowing for more flexibility in accommodating genuine delays.
- Simpler Loss Rules: The rules for carrying forward and setting off losses have been redrafted to eliminate ambiguities that often led to legal disputes, making them easier for taxpayers to understand.
- Refined Definitions: The term “receipt” has been replaced with “income,” aligning the law with core taxability principles and ensuring only taxable income is considered for calculations.
- Benefits for Companies: Companies under the new concessional tax regime will now be eligible for the Section 80M deduction, a move that harmonizes benefits across different corporate tax structures.
According to Dinkar Sharma of Jotwani Associates, these provisions signal a strong push for “simplification, certainty, and fairness.” The bill is now on its way to the Rajya Sabha for further consideration.
