Parliament Monsoon Session: The Central Government tabled a fresh version of the Income Tax Bill in the Parliament on Monday, August 11. The new bill will incorporate the recommendations of the Select Committee of Parliament. This follows the withdrawal of the earlier version of the Income Tax Bill, 2025, which was introduced in February this year.
The revised bill received Cabinet approval last Friday. Finance Minister Nirmala Sitharaman then withdrew the earlier version, paving the way for an updated draft. The bill could have been introduced in Parliament on Friday itself, but disruptions led to the adjournment of the House before the presidential assent for withdrawal was received.
Government sources said the decision to introduce a single, updated version was aimed at avoiding confusion caused by multiple drafts and ensuring that all recent changes were incorporated.
Select committee’s role and recommendations
The Income Tax Bill, 2025, was initially tabled on 13 February to replace the six-decade-old Income Tax Act, 1961. The draft was referred to the Select Committee of the Lok Sabha, chaired by BJP MP Baijayant Panda, which examined the legislation and adopted its report last month.
The committee made 285 recommendations focused on simplifying the structure and language of the tax code, without altering tax rates or major policies. These suggestions aim to modernise the legislation while preserving predictability for taxpayers.
Key proposed changes
Among the major recommendations incorporated into the new bill are:
- Tax Refunds: Removal of the provision that denied refunds for returns filed after the due date. Under the revised clause, tax refunds can be sought at the time of filing, regardless of delay.
- Inter-Corporate Dividends: Restoration of the section 80M deduction for companies availing the special rate under section 115BAA, which had been omitted in the earlier draft.
- Nil TDS Certificates: Provision for taxpayers to apply for NIL TDS certificates, offering relief in cases where no tax deduction at source is warranted.
These adjustments are largely in the nature of drafting refinements, alignment of phrases, and correction of cross-references.
IT Department’s clarification on capital gains
Speculation in some media reports suggested that the new bill might alter capital gains tax rates. The Income Tax Department, however, issued a clarification on X (formerly Twitter), denying any such change. Officials reiterated that the primary purpose of the bill is to simplify the language, remove obsolete provisions, and restructure the law for clarity, not to modify tax rates.
The new bill aims to bring a cleaner, more coherent framework to India’s taxation system.