The Lok Sabha passed the revised version of the Income Tax Bill of 2025 as presented by Indian Finance Minister Nirmala Sitharaman on Aug. 11. The bill was previously introduced on Feb. 13, 2025. It aims to streamline the Income Tax Act of 1961, refining the text and language with a clear organisation of regulations.
The revised edition includes amendments through recommendations made by the 31-member select committee headed by the BJP’s Baijayant Panda.
The bill will help individual taxpayers and MSMEs understand their tax obligations, avoiding hefty litigation and penalties due to noncompliance once it is published into law in the official gazette.
How Will the New Changes Affect the Current Income Tax Act?
The revised version of the Income Tax Bill of 2025 will:
- Reduce the sections from 819 to 536.
- Decrease the total number of chapters to 23.
- Promote transparency and simplify the use of technology.
- Introduce a single “Tax Year” concept by replacing terms like “previous year” and “assessment year”.
- Eliminate vague provisions to help entrepreneurs avoid tax disputes.
- Grant more powers to the Central Board of Direct Taxes to ease and further the digital tax transformation.
Changes to Income Tax Bills 2025 After Committee Suggestions
Take a look at the below-mentioned major changes to the Income Tax Bill 2025 after the committee suggestions:
- Grant of tax refund even if the taxpayer fails to file the income tax return within the prescribed deadline.
- Define Micro, Small, and Medium Enterprises as per the MSME Development Act of 2006.
- Revive Section 80M deduction that allows domestic corporations to deduct dividends received from their subsidiaries.
- Provide a regulation that helps taxpayers with zero tax liability to obtain NIL-TDS certificates.
- Remove additional tax liability based on rent accommodations.
- Allow taxpayers a 30% deduction to house property income after writing off municipal taxes.
- Introduce home loan deduction on rented properties.
- Simplify procedures on advance ruling mechanism and tax deducted at source (TDS) on Provident Fund (PF) withdrawals.
- Provide clarification on penalty charging powers of the Income Tax Department & CBDT.
- Rectify technical and linguistic errors.
- Extend the commuted pension deduction benefit to non-employees, including beneficiaries, family members, or other related parties.
The Revised version of the Income Tax Bill of 2025 not only simplifies the “Income Tax Act of 1961” but also provides various benefits for businesses and entrepreneurs (SMEs), empowering and strengthening the startup economy of the country.
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