Lok Sabha, on Monday, passed the Income-Tax (No 2) Bill, 2025 and The Taxation Laws (Amendment) Bill, 2025, without a debate, hours after Finance Minister
Nirmala Sitharaman introduced it in the House.
This new bill, officially titled the Income-Tax (No. 2) Bill, 2025, replaces the previous version that was formally withdrawn on August 8, 2025.
The Income Tax (No.2) Bill, 2025, which was introduced on Monday afternoon after the government on Friday last withdrew the Income Tax Bill, 2025 in the Lok Sabha, incorporates almost all recommendations of the Select Committee, which examined the legislation.
The Centre's decision to withdraw the initial bill and introduce a revised one was based on the recommendations of a parliamentary select committee.
The new bill incorporates most of the 285 suggestions made by the Select Committee, which aimed to address drafting errors, enhance clarity, and simplify the tax system. The government had previously announced in its July 2024 budget that it would conduct a comprehensive review of the Income-tax Act of 1961 to make the law more concise, clear, and accessible.
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The new Income Tax Bill was passed without debate amid opposition protests over their demand for debate on Special Intensive Revision (SIR) of electoral rolls in Bihar. Both Lok Sabha and Rajya Sabha have witnessed continuous disruptions since the beginning of the monsoon session of Parliament over the opposition's demand.
Income Tax Bill 2025: Key features
The key features of the new Income Tax Bill 2025 are as follow:
Simplification of the tax code:
The new legislation seeks to replace the complex Income-Tax Act of 1961, which has undergone thousands of amendments. The new bill simplifies the law by nearly 50 per cent, making it easier for taxpayers to understand.
Incorporation of parliamentary recommendations:
The revised bill adopts a significant number of the suggestions from the select committee. This includes clearer definitions for various entities like "parent company" and provisions for non-profit organizations and religious trusts.
Taxpayer-friendly provisions:
The bill includes changes to make the system more fair. One notable change is the removal of a provision that would have denied tax refunds for returns filed after the due date, ensuring that taxpayers who miss deadlines for genuine reasons can still receive their refunds.
Digital and data-driven methods:
The bill is designed to align the tax system with modern digital and data-driven methods for tax collection and dispute resolution.
This revised bill is part of the government's broader effort to create a more efficient and transparent tax framework. The goal is to reduce legal ambiguity and unnecessary litigation for both individual taxpayers and MSMEs.
On the new Income Tax Bill 2025 passed in the Lok Sabha, Congress MP Karti Chidambaram said, "It is very disappointing that bills are getting passed without giving the Opposition the opportunity to express its views. While we have been agitating about the SIR issue, the government has been unyielding... There are many things we want to highlight, particularly in the Sports Bill. The government is not taking any action to broaden sports participation or give a boost to excellence. This whole exercise has only been to control various sports bodies through the National Sports Board..."
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SP chief Akhilesh Yadav said, "This is the BJP's way of working. Such a big decision was taken without any discussion in the House... Look at their foreign policy, tariff after tariff, our entire business is dependent on China, so what kind of amendment are they making?... No one could even imagine that 20,000 primary schools would be shut down. If the poor children are not able to study, no amount of income tax bills can bring you happiness?..."
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