Income Tax Bill 2025 Updated Version Tabled Today, Know Key 10 Major Amendments Introduced
The previous week, the Union Finance Minister, Nirmala Sitharaman, had officially withdrawn the old draft version of the Income Tax Bill 2025. Now, the finance minister is expected to present the revised version of the Income Tax Bill 2025 in Lok Sabha today. The revised version of the bill will include a few key recommendations of the Select Committee of the Lok Sabha. Last month, a 4,500-page report, including 285 recommendations, was submitted to the Parliament by the Select Committee of the Lok Sabha, suggesting amendments to the Bill. The initial bill was introduced in February, at the time of the budget session of Parliament.
When the initial bill was introduced, it was then directly sent to the Select Committee for detailed inspection to amend the Income Tax Act, 1961. These changes are aimed towards simplifying law compliance, easing legal actions, and enhancing taxpayer relief.
Old Law Vs. New Bill: What’s Changing?
The Income Tax Act of 1961 is still the main law used for collecting income tax in India. However, over the years, people have found its language and rules to be too complicated.
In the new draft tax bill, the government has made some important changes:
- The language has been made simpler, and the rules are clearer.
- The law is now divided into 536 sections and 16 schedules, making it easier to read and understand.
- The confusing system of having both a “Previous Year” and an “Assessment Year” has been replaced with a single “Tax Year” to avoid confusion.
- Any rules that were unclear or contradictory have been removed to reduce legal disputes.
- To support digital tax services, the Central Board of Direct Taxes (CBDT) has been given more power to make rules.
Ten Key Changes in Revised Income Tax Bill 2025
1. Refunds Allowed Even for Late Returns: You can now get a tax refund even if you file your return after the due date.
2. No More 80M Deduction for Inter-Corporate Dividends: Companies can’t claim deductions under section 80M for dividends received from other companies.
3. Option for NIL-TDS Certificate: People or businesses who don’t have taxable income can now get a certificate to stop tax deduction (TDS) from their payments.
4. No Tax on Deemed Rent for Empty Homes: If you own a vacant second house, you won’t be taxed on notional (imaginary) rent anymore.
5. Clear Rules for 30% Deduction on House Property: The law now gives a clear explanation for the 30% standard deduction allowed on income from house property.
6. Interest Deduction on Home Loans for Rented Homes: You can still claim a deduction on home loan interest if you’ve rented out your house.
7. Simpler and More Transparent Procedures: Tax procedures and rules have been made clearer and easier to follow.
8. MSME Definition Aligned with MSME Act: The definition of Micro, Small, and Medium Enterprises (MSMEs) in the tax law now matches the official MSME Act.
9. Better Legal Wording and Structure: The entire law has been reworded to be more understandable and well-organised.
10. Bigger Tax Relief on Commuted Pension: Tax benefits on commuted pensions are now also available to some people who are not regular employees. Earlier, only employees could get a tax break on commuted (lump sum) pension. Now, certain non-employees can also claim this benefit.