Revised Income Tax Bill 2025: A Comprehensive Overhaul Unveiled

Finance Minister Nirmala Sitharaman introduced a new Income Tax Bill in Lok Sabha aimed at consolidating and amending current laws. The legislation follows the withdrawal of a previous bill and incorporates extensive recommendations to improve clarity, support taxpayers, and align with existing frameworks, marking a significant legislative effort.

On Monday, Finance Minister Nirmala Sitharaman presented the much-anticipated Income Tax Bill 2025 in Lok Sabha, aimed at consolidating and revising the nation's income tax laws. Just three days earlier, the earlier version of the bill was withdrawn, making way for this updated legislation, known officially as The Income-Tax (No.2) Bill, 2025.

The 31-member Select Committee, led by BJP MP Baijayant Panda, had reviewed the initial draft and suggested numerous amendments. The bill's withdrawal came amid protests from opposition members; however, the parliamentary session on July 21 saw the presentation of a panel report, recommending crucial amendments to eliminate ambiguities and better align the new law with existing frameworks.

Among its 4,584-page report, the Select Committee proposed 566 recommendations, including extending tax refund provisions for late filings, clarifying definitions under the MSME Act, and refining guidelines for non-profit organizations. The panel also addressed advance ruling fees, provident fund TDS, and other tax issues, in a bid to streamline the 1961 Act and reduce litigation.

(With inputs from agencies.)