New Delhi – Finance Minister Nirmala Sitharaman on Monday introduced The Income-Tax (No. 2) Bill, 2025 in the Lok Sabha, three days after the earlier version of the legislation was withdrawn. The new bill seeks to consolidate and amend laws relating to income tax.
The move follows recommendations from a 31-member Select Committee chaired by BJP MP Baijayant Panda, which had suggested several changes to improve clarity, tighten definitions, and align the law with existing frameworks. The earlier bill was withdrawn amid uproar from the opposition.
On July 21, the panel’s report — spanning 4,584 pages — was presented in the Lok Sabha, containing 566 recommendations based on stakeholder feedback. Among its key proposals were changes to allow refunds even when income tax returns are filed late, aligning the definition of micro and small enterprises with the MSME Act, and clarifying provisions for non-profit organisations regarding “income” versus “receipts,” anonymous donations, and the deemed application concept.
Other suggested amendments covered advance ruling fees, TDS on provident funds, low-tax certificates, and penalty powers. The aim, according to the committee, is to ensure unambiguous interpretation of the new law and reduce litigation.
The revised bill is part of the government’s broader effort, announced in the July 2024 Budget, to overhaul the Income-tax Act of 1961 and make it more concise and user-friendly. The first version of the new Income Tax Bill was tabled in the Lok Sabha on February 13, 2025, before being withdrawn last week.
