new delhi, Aug 12
The Rajya Sabha Tuesday passed the revised New Income Tax Bill 2025, along with the Taxation Laws (Amendment) Bill 2025. The Bills, being money bills, which were earlier passed in the Lok Sabha on Monday, were now returned to the Lok Sabha.
Notably, the Opposition benches were empty in the Upper House during the passage of the Bills.
The Income Tax Bill seeks to replace the existing Income Tax Act of 1961 with a more streamlined and litigation-resistant direct tax code. It proposes to allow deductions for inter-corporate dividends for certain companies, permit taxpayers to claim refunds after filing their returns, even if the deadline has passed, and allow taxpayers to avail NIL TDS certificates if they don’t have a tax liability.
The Bill also aims to clarify the definition of “relative” to avoid ambiguity and allow deduction of pre-construction interest on borrowed capital for let-out properties.
The revised Bill is expected to benefit taxpayers in several ways, including reduced litigation by simplifying tax laws, and reducing complexity.
The Bill’s focus on digital tax administration and faceless assessment will make compliance easier and more efficient. It also provides a more relieved tax structure, ensuring that more money is saved in the hands of taxpayers.
The government’s objective behind introducing the revised Bill is to provide a clear and updated version of the tax law, addressing concerns and suggestions from various stakeholders. According to Baijayant Panda, the new law will simplify India’s decades-old tax structure, cutting down legal confusion.
The Income-tax Act passed in 1961 has been subjected to numerous amendments since its passage 60 years ago. As a result of these amendments, the basic structure of the Income-tax Act has been overburdened and language has become complex, increasing cost of compliance for taxpayers and hampering efficiency of direct-tax administration. Tax administrators, practitioners and taxpayers have also raised concerns about the complicated provisions and structure of the Income-tax Act.
Therefore, the government in the budget in July 2024 announced that a time-bound comprehensive review of the Income-tax Act, 1961 would be undertaken to make the Act concise, lucid, easy to read and understand. Accordingly, Income-tax Bill, 2025 has been prepared which proposes to repeal and replace the Income-tax Act, 1961.
“This complexity has increased the cost of compliance for taxpayers and hampered the efficiency of direct-tax administration. Tax administrators, practitioners, and taxpayers have also raised concerns about the complicated provisions and structure of the Income-tax Act,” she further said, adding: “Therefore, the government announced in the budget of July 2024 that a comprehensive review of the Income-tax Act, 1961, would be undertaken to make the Act concise, lucid, and easy to read and understand.”
“Accordingly, the Income-tax Bill, 2025, has been prepared, which proposes to repeal and replace the Income-tax Act, 1961,” she said.
