New Delhi: The Lok Sabha in the Indian Parliament approved the new Income Tax (No. 2) Bill, 2025 on Monday (August 11, 2025) without any discussion. Union Finance Minister Nirmala Sitharaman introduced this bill. This new bill will completely replace the old Income Tax Act that came into effect in 1961. Almost all recommendations suggested by the Lok Sabha Select Committee, as well as suggestions from taxpayers and other stakeholders, have been incorporated into this bill. Additionally, the Taxation Laws (Amendment) Bill was also approved, which aims to provide tax exemptions to members of the Unified Pension Scheme.
Why the New Bill?
The old Income Tax Act has been in force since 1961 and has undergone more than 4,000 amendments so far. This new bill aims to simplify the legal language, provide clarity, and make it more taxpayer-friendly. The Select Committee reviewed it for four months and submitted a 4,500-page report with over 285 recommendations. The new act will consist of a total of 536 sections and 16 schedules.
Key Changes:
– Tax Year Concept: In place of the previous year (Previous Year) and assessment year (Assessment Year), a single “Tax Year” concept will now be implemented.
– Removal of Unnecessary Provisions: Mutually contradictory and unnecessary provisions have been removed. The Central Board of Direct Taxes (CBDT) has been given the authority to formulate new rules accordingly.
– Tax Refund Relaxation: Even those who file returns late will be entitled to refunds.
– Dividend Relief: Exemption on inter-corporate dividends up to Rs. 80 million has been reinstated.
– NIL-TDS Option: Those who do not need to pay tax can obtain a NIL-TDS certificate in advance.
– Vacant House Exemption: Tax exemption on vacant houses will be provided.
– House Property Deduction: Municipal taxes have been removed, and clarity has been brought to 30% standard deduction and interest exemption on rented houses.
– MSME Compliance: Changes have been made to align with the MSME Act.
These changes aim to make it easier for taxpayers and modernize the tax system. The bill still needs to be approved in the Rajya Sabha. Once implemented, more positive changes are expected in the tax system.
Follow the IndiaWorld.in channel on WhatsApp:https://whatsapp.com/channel/0029Vb3l9160AgWKgQeRCy0a
Read also : Sri Krishna Janmashtami 2025 – Why is it so special this year?
Read also : Elon Musk Threatens Legal Action Against Apple
