Govt withdraws I-T Bill, new version on Monday

The Income Tax Bill, 2025, initially introduced in the Lok Sabha on February 13 to replace the decades-old Income-Tax Act, 1961, has been withdrawn, the Ministry of Finance said on Friday. A revised Bill, incorporating key recommendations from a select committee, is scheduled to be tabled on Monday, a government source said.

The revised Bill integrates most of the select committee’s suggestions, reflecting a comprehensive review to modernise the tax framework while addressing stakeholder concerns.

The Bill was referred to the committee in February. The committee presented its report in the Lok Sabha on July 21.

“Almost all of the recommendations of the committee have been accepted by the government. Suggestions have also been received from other sources which are required to be incorporated to convey the correct legislative meaning. There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing," a statement by Finance Minister Nirmala Sitharaman said.

The committee had made nearly 285 suggestions regarding the Bill. The suggestions include removal of a provision that denies refunds if income tax returns are filed after the due date. The committee also highlighted that the new Bill might introduce confusion among non-profit organisations, especially those with mixed charitable and religious objectives. “This ambiguity could lead to uncertainty for existing trusts and those established after 1961, increasing litigation risks," it said.

The panel highlighted that the current requirement to file a return solely for the purpose of claiming a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source. The panel proposed that the law should not compel a return merely to avoid penal provisions for non-filing.

Announced in the full Budget for 2024-25 (April-March), the Income Tax Bill, 2025, aims to simplify the Income Tax Act, 1961, and make it simpler, more lucid and easier for taxpayers to calculate taxes and file returns.

The Bill aims to give greater autonomy and powers to the Income Tax Department and the government to bring about policy changes and amnesty schemes for taxpayers. The Bill allows the authorities to gain access to email servers, social media accounts, online investment and trading accounts storing details of asset ownership. The committee retained these provisions.

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