Income Tax Bill 2025: The Lok Sabha on Monday passed two important legislations pertaining to taxation — Income-Tax (No 2) Bill and Taxation Laws (Amendment) Bill. Of these, the Income Tax (No.2) Bill 2025 seeks to consolidate and amend the law relating to Income Tax Act 1961. The Bill will now go to the Rajya Sabha for approval and thereafter to the President for assent. It will become law once the Presidential assent is provided.
The Income Tax (No.2) Bill 2025 will replace the Income Tax Act, 1961. Earlier in February, Finance Ministry said that the new bill reflects the government’s commitment to enhance ease of doing business by providing a tax framework that is simple and clear.
Income Tax Bill 2025
It further added that the new bill aims to simplify the tax system for all and is built on these core “SIMPLE” principles:
- S – Streamlined structure and language
- I – Integrated and Concise
- M – Minimized Litigation
- P – Practical and Transparent
- L – Learn and Adapt
- E – Efficient Tax Reforms
The new Income Tax bill has been designed so that one can easily understand tax laws. The provisions will be rewritten in plain, easy-to-understand language.
The Income-Tax Bill, 2025 has been introduced in the Lok Sabha today.
The Bill aims to simplify the tax system for all and is built on these core “SIMPLE” principles:⬇️ pic.twitter.com/bX4Zc1ImdR— Income Tax India (@IncomeTaxIndia) February 13, 2025
I – Integrated and Concise
There should be no more confusion. The new bill will be a single, well-structured act that consolidates all related provisions. The volume is reduced without losing the spirit.
M – Minimised Litigation
The new Income Tax bill will provide more clarity with fewer tax disputes. The FAQs, guidance notes and explanations will further prevent multiple interpretations.
P – Practical and Transparent
The new law will make taxation easier to understand. It will eliminate redundant provisions and simplifies cross-references. It uses tables and structured formats for better clarity.
L – Learn and Adapt
The new Income Tax bill is a balanced and provide future-ready reforms. It will adopt global best practices from various tax jurisdictions. It will keep the country’s core tax principles intact.
Story continues below this ad
E – Efficient Tax Reforms
The new law will ensure reforms that don’t disturb settled tax policies. It focuses on improving efficiency.
About Income Tax (No 2) Bill
The Income Tax (No 2) Bill streamlines TDS, exemptions and other compliance-heavy provisions. It also allows individuals to claim refunds without penalty on delayed filings. It provides for ‘nil’ TCS on Liberalised Remittance Scheme (LRS) remittances for education purposes financed by any financial institutions, reports PTI.
Retained Provisions (same as the Income-tax Act, 1961):
TDS refund flexibility: Individuals not otherwise required to file ITR can still claim TDS refunds without being bound by the due date.
Tax exemption for anonymous donations to religious-cum-charitable trusts: Restored to match the 1961 Act, allowing exemption for trusts with both religious and charitable purposes.
Story continues below this ad
Taxation basis for NPOs: Shifted back from taxing “receipts” to taxing “income” only.
Anonymous donation exemption extended to mixed-object NPOs: Same treatment as under the 1961 Act.
New or Revised Provisions:
Inclusion of “profession” in Clause 187: Professionals with receipts over Rs 50 crore can use prescribed electronic payment modes.
Redrafted provisions on carry forward and set-off of losses for better clarity.
Story continues below this ad
TDS correction statement time limit reduced from 6 years to 2 years.
Anonymous donation rules clarified: Wholly religious trusts get exemption; mixed-object trusts (religious + charitable) also exempt, unlike the original February bill.
Unified Pension Scheme (UPS) exemption added.
Block assessment changes in Income Tax search cases.
Direct tax benefits for Saudi Arabia’s public investment funds included.
Dropped Proposals from Original February Bill (reversed in No.2 Bill):
Removal of exemption for anonymous donations to mixed-object trusts (now restored).
Story continues below this ad
Mandatory ITR filing within due date for TDS refund claims (now removed).
Taxation of “receipts” of NPOs instead of “income” (now reverted).
