The government is set to present a revised version of the Income Tax Bill, 2025, in the Lok Sabha today. This bill is made to replace the old Income Tax Act, 1961, with a simpler, clearer & more structured law that is easier for taxpayers to understand.
Last week, Finance Minister Nirmala Sitharaman officially withdrew the earlier draft of the bill. The first version, introduced in February during the Budget session, was sent to a Select Committee of the Lok Sabha for review. This selected committee studied the bill in detail, made 285 recommendations and submitted a grand 4,500-page report last month.
The major goal of the new bill is to remove confusion and doubt about legal terms, cut down on litigation and make tax filing more straightforward. It also proposes replacing the old “Previous Year” and “Assessment Year” system with a simpler concept called the “Tax Year”.
Also Read: What is the assessment year in Income Tax?
The Major Changes in the Revised Bill
Here are the major changes likely in the revised bill include:
- Allowing taxpayers to claim a refund even if returns are filed late.
- Bringing back Section 80M deduction on inter-corporate dividends.
- Providing a NIL-TDS certificate for those with no tax liability.
- Removing the extra tax on vacant property based on “deemed rent”.
- Allowing a 30% standard deduction on house property after municipal tax deduction.
- Extending the home loan interest deduction to rented properties.
- Linking the MSME definition to the MSME Act.
- Expanding pension deduction benefits to non-employees.
- Correcting technical & legal drafting issues.
- Improving procedural transparency in areas like advance rulings and TDS.
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It also promotes digital administration, giving the Central Board of Direct Taxes (CBDT) more powers to frame rules while having an impact on individual taxpayers and businesses. This is part of the government’s larger effort to modernize tax processes & reduce paperwork.
Experts say “these changes could make tax bill compliance easier, promote investment and give people more clarity in managing their finances. If passed, this bill could mark a major shift in India’s tax system, making it more modern, digital, hassle-free and user-friendly”.
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