Historic Tax Reform Passed by Lok Sabha

In a landmark move to modernize India's taxation system, the New Income Tax Bill 2025 has been passed by the Lok Sabha. This significant reform aims to simplify tax procedures and reduce compliance burdens for both individuals and corporations.

Finance Minister Nirmala Sitharaman presented the revised version of the I-T bill to Parliament, incorporating changes recommended by the Parliamentary Select Committee. The initial bill, introduced on February 13, was withdrawn on August 8 to make way for these updates.

Key Highlights of the New Income Tax Bill 2025

The legislation simplifies the tax framework by reducing the volume of text and sections by about 50%, making it more accessible. It introduces a unified "tax year" concept, eliminating the complex distinction between assessment year and previous year.

Taxpayers can now claim refunds even for returns submitted after deadlines, offering relief to many. The bill also retains provisions for carrying forward losses and provides tax relief on anonymous donations to religious trusts.

MSME classifications have been adjusted to align with the MSME Act, and the deadline for submitting TDS correction statements has been reduced from six to two years, aiming to decrease deductee complaints.

Expert Insights on the Tax Reforms

Tax experts praise the reforms for simplifying compliance and creating a more predictable taxation framework. Gouri Puri of Shardul Amarchand Mangaldas and Co noted the revised bill addresses previous uncertainties, promoting fairness and reducing disputes.

The updated bill removes outdated provisions and reorganizes sections for easier navigation, employing straightforward language to enhance understanding.