Income-tax Bill in Parliament today: Here’s what to expect from the sweeping revamp

Union Finance Minister Nirmala Sitharaman will table the revised Income-tax Bill, 2025 in the Lok Sabha today after withdrawing the original version introduced on Feb. 13, 2025.

The withdrawal had sparked criticism over the time and effort spent on the earlier draft. But the government insists the move is aimed at ensuring legislative clarity and efficiency. 

Sitharaman said the changes include technical corrections such as drafting refinements, alignment of phrases, and improved cross-referencing.

A major driver was the extensive set of suggestions from the Select Committee of Parliament, chaired by BJP MP Baijayant Panda. Parliamentary Affairs Minister Kiren Rijiju dismissed claims that the earlier work was wasted. 

“When a parliamentary committee submits a report with several proposed amendments, and many of them are accepted, the standard practice is to withdraw the original bill and introduce a revised version,” he said.

Rijiju explained that each amendment requires three separate motions, which is unworkable when over 285 changes — including 32 major ones — are recommended. “Withdrawing and reintroducing the Bill saves time and ensures procedural efficiency,” he said.

The new draft is expected to incorporate most of the 285 recommendations. Key provisions include limiting anonymous donations exclusively to purely religious trusts, excluding those that also run social services; allowing taxpayers to claim TDS refunds after the ITR filing deadline without penalties; and requiring tax officials to issue notices and consider responses before taking action.

The Bill also seeks to modernize the system through a digital-first, faceless assessment framework to ease compliance and reduce corruption risks. The legal language of the 1961 Act will be replaced with clearer, more accessible terms for public understanding.

If passed, the legislation will replace the 63-year-old Income-tax Act with a modern, simplified, and litigation-resistant direct tax code — a step the government calls one of the most ambitious tax reforms in recent decades.