Revised Income Tax Bill 2025: What does new I-T Bill propose & why was the old bill withdrawn? All you need to know

The Income-Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the existing Income-Tax Act, 1961, has now been withdrawn,  paving way for the revised Income Tax Bill, 2025.

The revised bill incorporates most of the recommendations given by the select committee — which examined the Income Tax Bill 2025 and submitted its report on July 21. The committee had made 285 suggestions to the I-T Bill, 2025.

Those changes relate to simplifying the language of the draft legislation. After the committee gave its report in the Lok Sabha, government withdrew the previous version of the Income Tax Bill 2025.

Aside from the committee’s proposals, suggestions were also received from other sources that are required to be incorporated. The changes essentially relate to drafting, aligment of phrases, consequential changes and cross-referencing.

The revised Income Tax Bill 2025 will now be introduced on Monday i.e. August 11. Some of the changes proposed by the committee include the following:

New I-T Bill: Changes proposed by the committe

1. Tax refunds: Removal of provision that denies income tax refunds if returns are filed post-due date. The earlier version of the bill which is now withdrawn required that a person seeking refunds must file ITR within the due date. And section 433 of the new IT bill states that a refund is sought only while filing a return.

2. Inter-corporate dividends: Another change is section 80M deduction, (under clause 148 of the new bill) for inter corporate dividends for inter corporate dividends for companies that avail the benefit of special rate under section 115BAA was missed out in the draft of Bill which is now withdrawn.

3. Nil TDS: Another committee’s suggestion was to allow taxpayers to avail NIL TDS certificate.

Notably, some sections of the media late last month had reported that the new income tax Bill will make changes in rate of tax of capital gains– which was later denied by the income tax department via a post on X. The post said that the purpose of new bill is language simplification and removal of redundant/obsolete provisions instead of change of tax rates.

The Income Tax Act, 1961 has been in force from April 1, 1962. It was amended 65 times with more than 4,000 amendments.

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