A significant overhaul of India’s tax system is underway with the proposed Income Tax Bill, 2025. The Select Committee tasked with reviewing the bill has submitted its report to the Lok Sabha, recommending 285 changes to simplify the legislation and make it more taxpayer-friendly. This report was presented to the Lok Sabha on Monday, July 21, 2025.
Chaired by BJP MP Baijayant Panda, the committee’s comprehensive review involved consultations with various stakeholders, including experts, tax practitioners, industry representatives, tax officers, and non-profit organizations. Their report includes suggestions to simplify legal language, restore certain tax deductions, and clarify key definitions. The original bill, introduced by Finance Minister Nirmala Sitharaman on Budget day (February 13), aims to replace the more than six-decade-old Income Tax Act, 1961.
What’s Next for the Income Tax Bill, 2025?
According to Niyati Shah, Vertical Head – Personal Tax at 1 Finance, the bill will follow a structured parliamentary process:
- Debate in Lok Sabha: The bill, incorporating the Select Committee’s 285 recommended changes, will first be debated in the Lok Sabha. Lawmakers will have the opportunity to propose further amendments or seek clarifications, playing a crucial role in shaping the final version of the bill.
- Rajya Sabha Review and Approval: Once it clears the Lok Sabha, the bill will move to the Rajya Sabha (the upper house) for further discussion and approval. This house may also suggest amendments or request clarifications.
- Possible Referral to Parliamentary Committee: In some instances, the bill could be referred back to a parliamentary committee for a more detailed examination before its final passage by both houses.
- President’s Assent: Only after both the Lok Sabha and the Rajya Sabha pass the bill will it be sent to the President of India for assent. Once signed by the President, the bill officially becomes enforceable law.
Preeti Sharma, Partner, Tax and Regulatory Services at BDO India, lauded the committee’s work, stating, “The Committee report provides clause by clause evaluation of the Bill with total 566 observations / recommendations for change. This is a mammoth task performed in a record time with precise and relevant recommendations.”
The goal is to replace the outdated law with a new one that is transparent, easy to understand, aligned with current business requirements, and helps reduce tax disputes. The government intends to implement the new Income Tax law from April 1, 2026.