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Key Points

The government has withdrawn the Income Tax Bill 2025 for amendments after a parliamentary panel suggested 566 changes. Finance Minister Nirmala Sitharaman will reintroduce a revised version next week. The committee recommended clarifications on MSME definitions and NPO terms to reduce disputes. The new bill aims to simplify tax laws and minimize litigation.

Key Points: Sitharaman Withdraws Income Tax Bill 2025 for Amendments After Panel Report

  • Sitharaman withdraws bill amid opposition uproar in Lok Sabha
  • Panel suggests 566 changes for clarity and taxpayer relief
  • Recommendations include MSME alignment and NPO term clarifications
  • Revised bill to address ambiguities and litigation reduction
2 min read

Government withdraws new Income-Tax Bill from LS, to come with amended legislation

Finance Minister Nirmala Sitharaman withdraws Income Tax Bill 2025 for revisions based on Baijayant Panda-led committee's 566 recommendations.

"A new version of the Income Tax Bill, incorporating most of the recommendations... will be introduced on Monday, August 11 – Government Sources"

New Delhi, August 8

Finance Minister Nirmala Sitharaman on Friday moved to withdraw the Income-Tax Bill, 2025, after the BJP MP Baijayant Panda-headed 31-member Select Committee had suggested a few changes to the legislation.

The House approved the withdrawal of the Bill amid uproar by Opposition members.

"A new version of the Income Tax Bill, incorporating most of the recommendations made by the Select Committee chaired by Shri Baijayant Panda, will be introduced on Monday, August 11," people in the know said.

"To avoid confusion by multiple versions of the Bill and to provide a clear and updated version with all changes incorporated, the new version of the Income Tax Bill will be introduced for the consideration of the House on Monday," they added.

On July 21, the first day of the current Monsoon session of Parliament, the report of the parliamentary panel on the new Income-Tax Bill was presented in Lok Sabha. In its report, the panel has suggested important changes to tighten definitions, remove ambiguities, and align the new law with existing frameworks.

The panel examined the Income-tax Bill 2025, which seeks to simplify the language and structure of the Income Tax Act 1961 and submitted its report.

The Committee, in its 4,584-page report, identified several drafting corrections based on stakeholder suggestions, which they believe are essential for clarity and unambiguous interpretation of the new bill. The parliamentary panel has made a total of 566 suggestions/recommendations in its report.

To give significant relief to taxpayers, the committee has suggested changing the provision which disallows refunds if income tax returns are filed beyond the due date.

Other recommendations of the committee include aligning the definition of micro and small enterprises with the MSME Act.

For non-profit organisations, the committee asked for clarification over the terms 'income' vs 'receipts', anonymous donations, and the removal of the deemed application concept. The panel asked for these to be fixed to avoid legal disputes.

The report also recommended amendments in the bill for clarity on advance ruling fees, TDS on provident funds, low-tax certificates, and penalty powers.

In the July 2024 Budget, the government proposed a comprehensive review of the Income-tax Act of 1961. The purpose was to make the Act concise and lucid and reduce disputes and litigation.

The new Income Tax Bill was tabled in Lok Sabha by Union Finance Minister Nirmala Sitharaman on February 13, 2025.

- ANI

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Reader Comments

S
Shreya B
Why introduce half-baked bills in the first place? 4584 pages and 566 changes needed shows poor drafting. Our parliament should do better homework before wasting taxpayer money on repeated sessions.
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Aditya G
The refund provision change is a relief! Many salaried people miss deadlines due to employer delays. At least now we won't lose our hard-earned money because of technicalities 👍
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Priya S
As someone who runs an NGO, I'm happy they're clarifying income vs receipts. The current rules create so much unnecessary paperwork. Hope the new bill actually simplifies things like promised!
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Michael C
Working in India for 3 years now. The tax system here is... interesting. Glad to see efforts to modernize, but implementation will be key. Hope they don't make it more complicated than it needs to be!
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Karthik V
The MSME alignment is much needed! Small business owners like me spend more time on compliance than business. Hope the new law reduces our compliance burden. #EaseOfDoingBusiness

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