New Delhi — In a significant legislative move, the Central Government on Friday withdrew the much-debated Income-Tax Bill, 2025 from the Lok Sabha, following extensive feedback and recommendations from a Parliamentary Select Committee. The decision came after Finance Minister Nirmala Sitharaman moved a motion for withdrawal, which was approved by the House amid loud protests from Opposition benches.
The 31-member Select Committee, chaired by BJP MP Baijayant Panda, had conducted an in-depth review of the Bill and presented its report on July 21 during the ongoing Monsoon session. The panel, which examined the Bill clause-by-clause, made 566 recommendations aimed at tightening definitions, removing ambiguities, and ensuring the proposed law aligns with existing legislative frameworks.
Government sources confirmed that a revised version of the Bill, incorporating most of the panel’s suggestions, will be tabled on Monday, August 11. “To avoid confusion by having multiple versions and to present an updated draft reflecting all recommended changes, the new version will be placed before the House next week,” said a senior official.
The Committee’s exhaustive 4,584-page report outlined several crucial amendments. These include easing the provision that disallows refunds if income tax returns are filed after the due date, bringing the definition of micro and small enterprises in line with the MSME Act, and clarifying taxation rules for non-profit organisations — particularly regarding the distinction between ‘income’ and ‘receipts’, rules on anonymous donations, and the removal of the deemed application concept.
Additional recommendations focused on technical clarity in areas such as advance ruling fees, TDS on provident funds, the issuance of low-tax certificates, and streamlining penalty powers to reduce litigation.
The Income-Tax Bill, 2025, first introduced in the Lok Sabha on February 13, is part of a broader initiative announced in the July 2024 Union Budget to overhaul the Income-tax Act of 1961. The government’s objective is to simplify the law’s structure, modernise its language, and minimise tax disputes.
With the new draft expected on August 11, the coming week in Parliament is likely to see intense debate between the Treasury and Opposition benches over one of the most comprehensive tax reforms inrecent years.
