Union Finance Minister Nirmala Sitharaman is set to introduce a new, revised Income Tax Bill, 2025, in the Lok Sabha. This new legislation will replace a previous draft that was withdrawn following extensive feedback from a parliamentary committee.
Thank you for reading this post, don't forget to subscribe!The government’s decision to withdraw the initial bill and introduce a new one is aimed at ensuring legislative clarity and efficiency. Parliamentary Affairs Minister Kiren Rijiju stated that adopting the hundreds of suggested amendments individually would have been too time-consuming and procedurally unviable. The new bill will incorporate the accepted changes in a single, consolidated draft.
Key Provisions of the New Bill
The revised bill, which aims to replace the 63-year-old Income-tax Act, 1961, is expected to include several key provisions based on the recommendations of the Select Committee of Parliament:
- Simplified Tax Code: The new legislation will feature clearer, more accessible language to simplify compliance and reduce litigation. It aims to create a streamlined and litigation-resistant direct tax code.
- Faceless Assessment: The bill proposes a modern, digital-first, and faceless assessment system designed to curb corruption and make the tax process more efficient.
- Taxpayer Relief: Taxpayers will be allowed to claim TDS refunds even after the Income Tax Return (ITR) deadline without facing penalties.
- Procedural Fairness: The bill will mandate that tax authorities issue proper notices and consider taxpayer responses before taking any action.
- Donations: A key change is the provision to limit anonymous donations solely to purely religious trusts, excluding those that also engage in social services.
- House Property Taxation: The bill addresses ambiguities in taxing vacant properties. It is expected to clarify that the standard 30% deduction for house properties should be calculated on the annual value after deducting municipal taxes. It also recommends extending the deduction for pre-construction interest to let-out properties.
- Uniform “Tax Year”: The new draft is expected to replace the terms “previous year” and “assessment year” with a unified “tax year” to reduce complexity.
- No Changes to Tax Slabs: The core tax structure, including tax slabs and capital gains rules, is expected to remain largely the same as announced in the Union Budget 2025.
