New Delhi: The central government has decided to withdraw the Income-Tax Bill, 2025, just months after it was introduced in Parliament on February 13. This move comes after a Parliamentary Select Committee led by Baijayant Panda reviewed the bill and suggested several significant changes. To avoid confusion caused by multiple amendments to the original draft, the government will now present a fresh and updated version of the bill on Monday, August 11.
The original Income-Tax Bill, 2025, was aimed at replacing the decades-old Income-tax Act of 1961. Its primary objective was to simplify India’s direct tax laws, making them easier to understand and reducing legal complexities. The bill did not alter existing tax rates or slabs but focused on clearer language and minimizing unnecessary litigation.
Key changes based on the committee’s recommendations are expected to be part of the new draft:
The General Anti-Avoidance Rules (GAAR), designed to prevent complicated tax evasion strategies, will be adjusted to consider the context of each case. This approach seeks to maintain a balance between strict enforcement and fairness toward honest taxpayers.
One contentious clause in the original draft permitted tax authorities to access digital devices, including bypassing passwords, in cases involving undisclosed foreign income. This raised concerns about privacy violations and governmental overreach.
The Finance Ministry clarified that this provision merely made explicit the powers already allowed by courts. The committee endorsed this view but recommended refining the language for clarity.
Other prominent features of the withdrawn bill, which are likely to be retained, include:
- Use of simpler legal language with fewer detailed explanations
- Consolidation of deductions to streamline tax filing
- Reduced penalties for minor offences
- A “trust first, check later” policy to lessen unnecessary scrutiny
- Introduction of digital tax tools and a clear definition of the “tax year”
- No changes to tax rates, slabs, or capital gains tax provisions
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