New Delhi, August 8: The government has withdrawn the Income Tax Bill, 2025, from the Lok Sabha. Originally introduced on February 13, 2025, to replace the existing Income Tax Act of 1961, the bill will now be reintroduced in a revised form on Monday, August 11.
The decision to withdraw the original draft was made to avoid confusion arising from multiple versions of the bill. The new version will incorporate most of the 285 recommendations made by the Parliamentary Select Committee chaired by Baijayant Panda. According to officials, the updated bill will provide a clearer and more comprehensive legal framework for India's direct tax system.
Panda stated that the revised legislation aims to simplify the country's decades-old tax structure, reduce legal ambiguity, and minimize litigation, especially for individual taxpayers and MSMEs.
The Select Committee submitted its detailed report to Parliament on July 21. The report spans over 4,500 pages and includes several critical suggestions for improving the draft legislation.
Key recommendations included in the revised Bill:
House Property Income:
The existing 30% standard deduction (post municipal tax deductions) should be explicitly mentioned in the new law to remove ambiguity.
The benefit of home loan interest deductions, currently available only for self-occupied properties, should be extended to rented properties as well.
Faster Refunds:
The committee emphasized the need to streamline and speed up TDS/TCS refund processes, making them more transparent and efficient for taxpayers.
Updated Tax Slabs and Rates:
The new bill will include revised tax slabs aimed at benefiting a wider section of taxpayers, particularly the middle class, by reducing tax liabilities and increasing disposable income, which is expected to boost consumption, savings, and investment.
Enhanced Tax Rebate:
Under the Finance Act, 2025, the income threshold for claiming tax rebate under Section 87A (for resident individuals under the new tax regime, Section 115BAC) has been increased from ₹7 lakh to ₹12 lakh.
The maximum rebate amount has also been raised from ₹25,000 to ₹60,000.
The new version of the Income Tax Bill, 2025, will be presented in Parliament on August 11 for consideration and debate.
