The Lok Sabha on Monday approved two major tax-related legislations — the Income-Tax (No. 2) Bill, 2025 and the Taxation Laws (Amendment) Bill. The revised Income-Tax Bill seeks to replace the decades-old Income Tax Act, 1961, streamlining provisions and removing ambiguities.
Finance Minister Nirmala Sitharaman reintroduced the bill after withdrawing it last week to incorporate the recommendations of the BJP MP Bijayant Panda-led Select Committee. The 31-member panel had proposed 566 changes aimed at simplifying language, eliminating repetitive definitions, and ensuring greater clarity.
Key changes in the revised bill include tighter legal definitions, removal of conflicting terms, and alignment with existing legislative frameworks. The Select Committee also suggested modifying provisions that previously prohibited tax refunds if returns were filed after the due date. The upgraded version is expected to incorporate these relaxations.
Other recommendations addressed the alignment of micro and small enterprise definitions with the MSME Act, clearer distinctions between “income” and “receipts,” clarification on anonymous donations, and removal of the “deemed application” concept. Amendments related to advance ruling fees, TDS on provident funds, low-tax certificates, and penalty powers were also proposed.
The new bill follows three guiding principles: simplifying language and structure, avoiding major policy overhauls, and maintaining existing tax rates. The government has also reorganized sections logically and removed redundant provisions for easier interpretation.
Once enacted, the 2025 Income-Tax Act is expected to modernize India’s direct tax framework while retaining overall policy continuity.