What Was the Income Tax Bill 2025?
Introduced in the Lok Sabha on "February 13, 2025" by Finance Minister "Nirmala Sitharaman", the Income Tax Bill 2025 aimed to replace India’s six-decade-old Income‑Tax Act of 1961. The goal? Simplify India’s tax architecture, make it more taxpayer‑friendly, and modernize compliance through clearer drafting and structure.
Why Was the Bill Withdrawn?
On August 8, 2025, Finance Minister Sitharaman formally withdrew the bill,prompting surprise among some, but decisively aiming to incorporate feedback from the Parliamentary Select Committee led by MP Baijayant Panda . The committee had delivered hundreds of recommendations (some reports say 285, others up to 566), spanning drafting consistency, clarity, and cross-referencing accuracy.
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What’s Next? A Revamped Bill Is Due on August 11
The revised version is slated for "reintroduction in Parliament on August 11, 2025", now set to reflect most of the committee’s suggestions.
Key Updates & Takeaways for Taxpayers
Simplification is the key aim: The new law proposes streamlined language, reduced complexity, and structured formatting to make compliance easier
Rebate changes: Under Section 87A, the tax rebate threshold for resident individuals has been raised to ₹12 lakh, and the maximum rebate increased to ₹60,000.
TDS and refunds: Taxpayers may now claim TDS refunds even "after" the ITR due date—without penalties.
Non‑profit organizations: Anonymous donations to purely religious NPOs remain exempt, while those involved in charitable activities like schools or hospitals may lose this exemption.
Clarity over language and structure: The revisions prioritize removing drafting inconsistencies, misalignments, and legal ambiguities.
Conclusion
Tthe Income Tax Bill 2025, introduced in February to replace the Income-Tax Act, 1961, was withdrawn on August 8, 2025 by Finance ministrer Nirmala Sitharaman to accommodate Select Committee suggestions. The revised, clearer, and more taxpayer-friendly version, with better rebate thresholds and compliance flexibility, is set to be tabled again on August 11, 2025. Taxpayers, MSMEs, and NGOs stand to benefit from improved clarity, relief, and reduced litigation risks.
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