Government Withdraws Income Tax Bill, 2025; Revised Version Due in Parliament
The government has withdrawn the Income Tax Bill, 2025, from the Lok Sabha, with a revised version scheduled to be introduced on August 11. The move allows for the incorporation of recommendations from a parliamentary select committee and other stakeholders. The bill, intended to replace the six-decade-old Income-Tax Act of 1961, aims to simplify tax laws. The committee had suggested several changes, including removing a provision that denies refunds for late-filed returns, which are expected to be included in the new draft.
Unpacked:
The original bill was withdrawn to incorporate recommendations from a parliamentary select committee and other stakeholders, ensuring the revised version would address concerns and suggested improvements before being reintroduced for debate and passage.
The revised bill aims to simplify language, remove obsolete provisions, and clarify the tax treatment of new assets like cryptocurrencies. It also intends to make processes more transparent and efficient, while retaining most tax rates and basic definitions from the 1961 Act.
If the committee’s recommendation is accepted, taxpayers who file returns late would no longer be automatically denied refunds, potentially making the tax system more equitable and encouraging compliance without severe penalties for delays.
The proposed commencement date for the new bill is April 1, 2026. The transition will involve phasing out the old Act and implementing new schemes for efficiency and transparency, with details to be laid before Parliament for oversight.