New Delhi: On Monday, Finance Minister Nirmala Sitharaman introduced a new Income Tax Bill in the Lok Sabha, called The Income-Tax (No. 2) Bill, 2025. This comes just three days after the government withdrew the earlier version of the Bill.
The earlier Bill was withdrawn after opposition protests, even though a 31-member Select Committee, headed by BJP MP Baijayant Panda, had already reviewed it and suggested some changes.
The committee had submitted its 4,584-page report on July 21, at the start of the Monsoon session of Parliament. The report included 566 suggestions to make the law clearer, correct drafting errors, and match it with other existing laws. These suggestions were based on feedback from various stakeholders.
Some important recommendations from the committee were:
Allowing tax refunds even if the income tax return is filed after the due date, to give relief to taxpayers.
Changing the definition of micro and small enterprises to match the MSME Act.
For non-profits, clearly explaining the difference between ‘income’ and ‘receipts’, rules for anonymous donations, and removing the “deemed application” rule to avoid disputes.
Giving more clarity on topics like advance ruling fees, TDS on provident funds, low-tax certificates, and penalty powers.
The government had announced in the July 2024 Budget that the old Income-tax Act of 1961 would be completely reviewed to make it shorter, simpler, and less prone to disputes. The first version of the new Income Tax Bill was presented in Parliament on February 13, 2025, but was withdrawn last week.
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