New Income Tax Bill 2025 Introduced in Parliament: What Key Parliamentary Panel Suggestions Are Included? Full Details

The much-anticipated New Income Tax Bill 2025 has been tabled in Parliament by Finance Minister Nirmala Sitharaman , featuring substantial revisions after a thorough review by a Parliamentary Select Committee . This new draft, replacing the Income-Tax Act of 1961 , is aimed at simplifying tax laws, improving compliance, and modernising the system through technology-driven measures.

Why the Bill Was Reintroduced

The initial version of the Bill, presented earlier this year, was withdrawn to avoid confusion from multiple drafts. The latest version integrates the majority of the 285 recommendations proposed by the 31-member committee headed by BJP MP Baijayant Panda, ensuring a single, comprehensive, and updated framework.

Major Changes Recommended by the Panel

1. Updated Definitions and Provisions

• A new definition of “beneficial owner” to allow taxpayers to carry forward losses when they gain direct or indirect share benefits in a given financial year.
• Clearer guidelines on the term “parent company” to remove ambiguity in corporate taxation.

2. Restored and Enhanced Deductions

• Reinstatement of the inter-corporate dividend deduction absent in the earlier draft.
• Standard 30% deduction after municipal tax deductions .
• Extension of pre-construction interest deductions to include let-out properties.

3. Relief for Individual Taxpayers

• Issuance of ‘Nil’ tax deduction certificates for eligible taxpayers.
• Discretionary penalty waivers in cases of unintentional non-compliance.
• Refunds for delayed ITR submissions by small taxpayers.

4. Banking and Compliance Clarity

• A more precise definition of non-performing assets (NPAs) to reduce prolonged tax-banking disputes.
• Elimination of all residual references to the 1961 Act for a cleaner, dispute-resistant tax code.

5. Support for Non-Profits and Charitable Trusts

• Clear provisions safeguarding the tax-exempt status of non-profit and religious-charitable organisations, ensuring that anonymous contributions do not impact their eligibility.

A Step Towards Modernisation

With its refined provisions, the New Income Tax Bill 2025 is positioned as a modern tax framework designed for today’s digital economy. By combining technology-driven measures with taxpayer-friendly reforms, it aims to streamline compliance, reduce disputes, and make India’s tax system more transparent and efficient.