The Income Tax Bill was introduced in Lok Sabha on February 13, 1961, and it replaced the previous Income Tax Law that was in place that year. Now, it’s set for a revision in 2025.
The updated bill includes many recommendations from a selection committee that reviewed the 2025 income tax proposals and reported back on July 21. This committee put forth 285 suggestions for the upcoming bill.
These revisions focus on making the language of the bill clearer. After the committee’s report was presented to Lok Sabha, the government decided to withdraw an earlier version of the 2025 income tax bill.
In addition to the committee’s suggestions, input was received from various other sources that also needed to be addressed. Changes mainly relate to drafting, rewording, consequential adjustments, and cross-references.
The revised Income Tax Bill for 2025 is expected to be introduced on Monday, August 11. Some of the proposed changes from the committee include:
New IT Bill: Changes Proposed by the Committee
1. Tax Refunds: The bill will remove provisions that prevent refunds when a return is filed. Previously, those requesting a refund were required to submit an Income Tax Return (ITR) by the deadline. With Section 433 of the new bill, a refund will now only be necessary when a return is submitted.
2. Dividend Adjustments: Another change involves a new deduction for inter-company dividends, specifically related to companies that qualify for special rates under Section 115BAA.
3. NIL TDS Certificates: The committee also suggested making NIL TDS certificates available to taxpayers.
Interestingly, some media outlets recently indicated that the new income tax bill might alter the capital gains tax rate. However, this was later denied by the Income Tax Bureau, stating that the focus is on simplifying the language and removing redundant clauses rather than changing tax rates.
The Income Tax Act of 1961 was enacted on April 1, 1962, and has since undergone 65 revisions, totaling over 4,000 amendments.
