Income Tax Bill 2025 Passed in Lok Sabha: The Lok Sabha on Monday passed the much-awaited Income Tax Bill, 2025, along with the Taxation Laws (Amendment) Bill, 2025, marking a significant reform in India’s direct tax regime. The revised bill, tabled by Finance Minister Nirmala Sitharaman, incorporates almost all recommendations made by the Parliamentary Select Committee, and aims to replace the Income Tax Act, 1961 with a modern, simplified structure.
The bill was passed shortly after it was introduced, and the House was adjourned for the day. The next step is approval from the Rajya Sabha, followed by the President’s assent, for the law to come into force.
Why the New Income Tax Bill Matters
The revised Income Tax Bill, 2025, is designed to consolidate and amend existing income tax laws to make them simpler, more transparent, and aligned with modern economic needs. According to the government, the draft includes corrections in drafting, phrase alignment, consequential changes, and improved cross-referencing to ensure clarity.
Major Changes in the Income Tax Bill, 2025
The Parliamentary Select Committee, led by BJP MP Baijayant Panda, submitted an extensive report with 285 specific recommendations and a total of 566 suggestions aimed at simplifying the tax system. The key highlights include:
- Income Tax Refund Reform
The new bill removes the earlier restriction that denied refunds if the Income Tax Return (ITR) was filed after the due date. This change ensures that eligible taxpayers can claim refunds even for late filings, reducing hardship for individuals and businesses. - Section 80M Deduction
Under clause 148 of the new bill, intercorporate dividend deductions for companies availing themselves of the special tax rate under Section 115BAA will now be allowed. This is aimed at reducing tax burden and avoiding double taxation in corporate structures. - NIL TDS Certificate Option
The revised bill allows taxpayers to apply for a NIL TDS certificate, offering relief to those whose income is below the taxable threshold or exempt from certain deductions. - Simplified Drafting and Alignment
The bill incorporates several changes for better legal clarity, cross-referencing, and streamlined compliance requirements.
What’s Next?
The bill now awaits Rajya Sabha approval. Once passed by both Houses and signed by the President, the Income Tax Bill, 2025 will replace the 64-year-old Income Tax Act, 1961 — a major overhaul of India’s taxation framework.
Expert Opinion
Tax experts believe that these changes will improve taxpayer convenience, reduce litigation, and align Indian tax laws with global best practices. By accepting the bulk of the committee’s suggestions, the government signals a pro-reform approach while balancing revenue needs