New Income Tax Bill Delayed, Fresh Version Coming August 11

1. Introduction & Key Features

• The Income-Tax Bill, 2025 was introduced in Parliament on February 13, 2025, by Finance Minister Nirmala Sitharaman. It aims to replace the existing Income-Tax Act of 1961, with simplified language, fewer provisions, and modernised structure.
• Highlights include:
  • Reduction in length (from 823 pages to about 622) and sections (down to 536), with chapters trimmed from 47 to 23.
  • Introduction of a unified “tax year” replacing “assessment year” and “previous year,” to streamline tax periods.
  • Virtual Digital Assets (VDAs), like cryptocurrencies, are now formally treated as capital assets and included in taxation provisions.
  • The bill retains existing tax slabs, timelines, and residency provisions, maintaining policy continuity.
  • Other tweaks include consolidated TDS provisions, clearer valuation rules, and better dispute resolution frameworks.

2. Select Committee Review & Recommendations

• A Lok Sabha Select Committee, chaired by BJP MP Baijayant Panda, submitted a comprehensive report on July 21, 2025, recommending 285 changes, including reinstating inter-corporate dividend deductions and removing refund denial provisions for late return filers.
• Notably, the committee proposed standardizing pension taxation, extending tax neutrality to private-sector retirees and other pensioners under approved schemes.
• Proposals also include allowing post-deadline ITR filings with refunds and no penalties—a taxpayer-friendly relief measure.

3. Withdrawal and Revision of the Bill

As of August 8, 2025, the government has withdrawn the original Bill to incorporate committee feedback and correct identified issues (e.g., in clauses addressing house property, salaries, commercial properties).

The revised draft is scheduled to be reintroduced on Monday, August 11, 2025.

Summary Table