The Lok Sabha on Monday cleared the modified Income Tax Bill, 2025, and the Taxation Laws (Amendment) Bill, 2025, paving the way for an overhaul of the country’s direct tax framework.
Finance Minister Nirmala Sitharaman tabled the revised Income Tax (No. 2) Bill, 2025, incorporating “almost all” of the 285 recommendations made by the Select Committee, along with additional stakeholder suggestions to refine the legal language. The new legislation is intended to consolidate and amend laws relating to income tax, replacing the Income Tax Act, 1961.
The Bill now awaits passage in the Rajya Sabha before being sent to the President for assent. Following the approval in the Lok Sabha, the House was adjourned for the day.
The Select Committee, chaired by BJP MP Baijayant Panda, submitted a 4,584-page report containing 566 suggestions, aimed at simplifying the tax regime and ensuring greater clarity. Changes recommended include:
Removal of the provision that denies income tax refunds if returns are filed after the due date.
Amendment to section 80M (clause 148 in the new Bill) allowing deduction on inter-corporate dividends for companies benefiting from the special rate under section 115BAA.
Allowing taxpayers to obtain a NIL TDS certificate under the new framework.
Other revisions involve drafting corrections, alignment of terminology, consequential changes, and improved cross-referencing. The government decided to withdraw the earlier version of the Bill and replace it with the revised Income Tax (No. 2) Bill, 2025, for a cleaner legislative framework.