The Union Government has officially withdrawn the proposed Income-Tax Bill, 2025, which aimed to overhaul the nearly six-decade-old Income-Tax Act, 1961. The draft, introduced in the Lok Sabha in February, will now be reintroduced in a refined form on August 11, following extensive review.
Why the Withdrawal?
A Parliamentary Select Committee, chaired by MP Baijayant Panda, reviewed the bill and submitted over 285 recommendations addressing technical inconsistencies and language clarity. The government decided a new consolidated version would prevent confusion arising from multiple amendments.
Key Suggestions Incorporated
- Clarified definitions, such as “beneficial owner”, to ease tax treatment around shareholding and loss carry-forwards.
- Restored inter-corporate dividend deductions, with clearer criteria and implementation.
- Expanded deductions such as pre-construction interest now applying to let-out properties.
- Simplification of definitions around tax assessments and property valuation.
- Ease-of-use improvements: removal of penalties on late filing for refunds, exemptions for certain anonymous donations, and faster tax dispute resolution timelines.
What’s Next
The re-drafted bill is expected to be more accessible, taxpayer-friendly, and aligned with real-world business contexts, especially for individuals, MSMEs, and non-profits. It aims to modernize India’s tax framework while maintaining continuity with existing policies.
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