New Delhi: The Revised Income Tax Bill was passed in Lok Sabha on Monday, marking a significant update to India's tax framework. Finance Minister Nirmala
Sitharaman reintroduced the Income-Tax (No. 2) Bill, 2025, which aims to replace the longstanding Income Tax Act of 1961. This legislation was passed without debate, amid protests from the Opposition. In February, while presenting the first draft of the bill, Finance Minister Nirmala Sitharaman outlined its guiding principles using an acronym S.I.M.P.L.E. These principles are: a Streamlined structure and language; Integration and conciseness; Minimisation of litigation; Practicality and transparency; a Learning and adaptive approach; and Efficient tax reforms.
Key Features of the New Income Tax Bill
The government has incorporated nearly all recommendations from the Select Committee, which reviewed the previous draft over four months. This committee presented an extensive report, exceeding 4,500 pages, detailing more than 285 suggestions to enhance the clarity and accessibility of tax provisions. The new bill consolidates and amends existing laws, offering a more straightforward structure with 536 sections and 16 schedules.
The new Income Tax Bill introduces a single concept of "Tax Year," replacing the previous terms "Previous Year" and "Assessment Year." It aims to simplify tax compliance by eliminating unnecessary provisions that often led to litigation. Additionally, the Central Board of Direct Taxes (CBDT) will gain enhanced powers to develop regulations suitable for the digital era.
Notable Changes for Taxpayers
Among the key changes included in the revised legislation are:
- Flexibility in tax refunds: Late filers will now have the right to claim refunds.
- Dividend relief: The reintroduction of Rs 80 million deduction on inter-corporate dividends.
- NIL-TDS option: Taxpayers with no tax liability can obtain advance NIL-TDS certificates.
- Tax relief on vacant properties: The provision for taxing only notional rent has been removed.
- Simplified compliance rules: Clarifications regarding TDS on provident fund withdrawals and advance ruling fees.
The Revised Income Tax Bill aims to modernise India's taxation processes, making it more comprehensible and accessible for all taxpayers. This initiative represents a crucial step in enhancing tax compliance and fostering a more efficient tax system in the country.
