NEW DELHI: The government has formally withdrawn the Income-Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the Income-Tax Act, 1961. A fresh version of the bill, incorporating most of the recommendations of the Select Committee chaired by BJP leader Baijayant Panda, will be tabled in the House on Monday, August 11, sources said.
The decision to withdraw the earlier draft was taken to avoid confusion from having multiple versions of the legislation and to present a consolidated text with all changes included.
The 31-member Select Committee, which submitted its report to the Lok Sabha earlier this week, has proposed over 30 amendments to the bill. These include changes in the definitions of “capital asset,” “infrastructure capital company,” and “MSME”; clarifications on property-related deductions; and reinforcement of the ‘actual payment’ rule for claiming business expenses.
One significant proposal is the reinstatement of a provision allowing the tax department to issue nil withholding tax certificates for specific payments — a clause dropped in the February draft, which only permitted low TDS certificates. The panel also recommended permitting refund claims even when returns are filed late.
For charitable and not-for-profit entities, the committee suggested replacing “receipts” with “income” for tax purposes, restoring the concept of “deemed application,” and providing clearer definitions. Other recommendations include bringing professionals under electronic payment norms, prescribing qualifications for valuers, and ensuring fairness in the application of General Anti-Avoidance Rules (GAAR).
In a relief to corporates, the panel said that the deduction for inter-corporate dividends in multi-tiered structures should also apply to companies that have opted for the 22% tax rate, as is the case under current law.
Experts say the changes are mostly corrective. Most of the amendments in the latest round are meant to fix errors in drafting from the first draft released for public comment.
Experts noted that several key recommendations involved removing ambiguities from language changes and ensuring a coherent presentation of provisions. The committee also clarified that policy-level changes fell outside the bill’s scope, with the finance ministry rejecting some suggestions as beyond its mandate.
The Income-Tax Bill, 2025, aims to simplify tax provisions without altering the overall structure of the current regime, focusing largely on plainer language and streamlined provisions.