New Income Tax Bill 2025 Passed by Lok Sabha
Thank you for reading this post, don't forget to subscribe!The Lok Sabha has passed the Income-Tax (No. 2) Bill, 2025, a major legislative update that will replace the decades-old Income Tax Act, 1961. The new law aims to modernize India’s tax system by simplifying compliance and leveraging technology to expand the tax base.
Finance Minister Nirmala Sitharaman stated that the government accepted “almost all” recommendations from a 31-member parliamentary committee, which was chaired by BJP MP Baijayant Panda. The previous version of the bill was withdrawn to incorporate these suggestions and make necessary drafting corrections.
Key Changes Suggested by the Parliamentary Committee
The committee’s extensive 4,575-page report included 285 recommendations. Here are some of the most significant changes incorporated into the new bill:
- Simplified Rules for Individuals: New measures aim to be more taxpayer-friendly, including allowing for discretionary waiver of penalties for unintentional non-compliance and making it easier for small taxpayers to get refunds on delayed ITR submissions.
- House Property Deductions: The bill reinstates a standard 30% deduction on income from house property after municipal taxes. It also extends pre-construction interest benefits on home loans to properties that are let out.
- Definition of “Beneficial Owner”: A revised definition will now allow for the carry-forward of losses when individuals gain direct or indirect share benefits during a tax year.
- Inter-corporate Dividends: The new legislation brings back the inter-corporate dividend deduction, which was absent in the original draft.
- Non-Profit and Charitable Trusts: Stronger provisions and clearer definitions were introduced to ensure that anonymous contributions do not affect the tax-exempt status of non-profit and religious/charitable organizations.
This new bill is designed to create a more self-contained tax code, free from the legal ambiguities of the 1961 Act, thereby providing a clearer framework for taxpayers and authorities alike.
