Central Government Withdraws Income Tax Bill-2025; Revised Version to Be Introduced in Lok Sabha on August 11

National News: The Central Government has officially withdrawn the Income Tax Bill, 2025, which was introduced earlier this year in the Lok Sabha. This bill was initially proposed on February 13, with the intent to replace the existing Income Tax Act of 1961. A revised and updated version of the bill is scheduled to be presented in the Lok Sabha on August 11, incorporating recommendations from the Select Committee along with other important suggestions.

Finance Minister Nirmala Sitharaman explained that the government referred the bill to the Select Committee for scrutiny on the same day it was introduced. The committee submitted its report to the Lok Sabha on July 21, and most of its recommendations have been accepted by the government. Additionally, suggestions received from other sources will be incorporated to give the bill a comprehensive legislative form. She further added that a new bill will be introduced in due course to replace the existing Income Tax Act, 1961.

Key Proposals of the Income Tax Bill-2025

The bill was part of the government’s broader plan to modernize the direct tax system, making it simpler and more taxpayer-friendly. The withdrawn draft included the following key changes:

• Simplified Legal Language: Shorter, clearer provisions designed for easier understanding and compliance by taxpayers.
• Reduction in Penalties: Lower penalties for certain tax offenses to make the system more supportive and taxpayer-friendly.
• No New Taxes: Existing tax slabs, capital gains provisions, income thresholds, and deadlines remain unchanged.
• Reduction in Litigation: More than 300 outdated provisions were removed, adopting a “trust first, verify later” policy to ease pressure on taxpayers.
• Modern Administration: Enhanced powers to the Central Board of Direct Taxes (CBDT), including digital monitoring, rule-making authority, and introducing the “tax year” concept to reduce confusion between the financial year and the assessment year.

Government’s Commitment and Next Steps

The decision to withdraw the Income Tax Bill, 2025, reflects the government’s careful and thoughtful approach to tax reforms. The amendments recommended by the Select Committee and other inputs aim to be more taxpayer-centric while strengthening tax administration.

The government is committed to introducing a new bill that is transparent, simple, and balances the interests of all stakeholders. The revised bill, set to be introduced on August 11, is expected to mark a significant milestone in the evolution of India’s taxation system.

This bill will not only reform India’s tax framework but also provide greater relief and convenience to taxpayers across the country. Through this move, the government has sent a clear message emphasizing transparency, inclusion, and a taxpayer-focused approach in reforming tax laws.