Income tax bill 2025
A committee of Parliament has suggested a change in the income tax bill of 2025, saying that even if the last date of ITR is missed by the taxpayers, they can still claim TDS refund without any fine. This new bill will replace the current Income Tax Act, 1961 and has been designed to simplify it. If this suggestion is considered, then millions of small taxpayers can get relief.
In the 4,575 -page report presented in the Lok Sabha, the committee headed by BJP MP Baijayant Panda has suggested many important changes in the draft bill. The purpose of these changes is to make tax rules easier, remove ambiguities and to keep honest taxpayers, especially senior citizens, pensioners, temporary workers and non-profit organizations (NOPOs).
Relief for small taxpayers
According to the current draft bill, people whose total income is less than the basic exemption limit but has been deducted on TDS, they have to file income tax return (ITR) to get refund. If they do not fill the return in the stipulated time, then they can also be fined and in some cases.
The committee admitted that this rule is very strict for those who do not have taxable income but TDS automatic cut by banks, employers or institutions. In such a situation, the compulsion to fill the returns for refund only puts unnecessary burden on small taxpayers.
To reduce this burden, the committee has suggested that if there is no intention of tax evasion, then the refund can be claimed even after the due date. Also, the penalty for not maintaining accounts should not be mandatory and discretionary, so that honest taxpayers do not get punished on paper mistake.
Changes in tax year and definitions
The committee has recommended to keep the same tax year by mixing words like last year and assessment year, suggesting a major structure improvement. This will make it easier to understand the tax code and reduce people’s confusion.
Apart from this, many old definitions such as capital assets and infrastructure capital company have also been suggested to update. At the same time, the actual payment rule has also been asked to strengthen so that business deductions are only received from the expenses that have been actually paid, not just on paper. This will increase transparency and curb the disturbances.
Religious donation and NPO exemption
The report also talked about the taxation of benami donation. Currently, the benami donation given to the pure religious trust in the draft bill is tax free, but the trusts who do both religious and social workers (such as running schools or hospitals) are being taxed.
The committee warned that this would affect NOS and recommend to continue the existing exemption. At the same time, the definitions have been asked to clear more so that the old religious and charitable trusts are not deprived of exemption due to vague language.
Gaar for foreign residents
The committee has recommended to improve the language of General Anti-Awareness Rule (GAAR) so that it is not incorrectly used against real corporate restructuring. For this, it has been suggested that the line should be added as per the conditions of the case so that the real deal is not considered tax evasion.
To make cross-border tax easier, the committee has also recommended the restoration of NIL withdrawal to non-residents. This will not delay unnecessary refunds in such cases where no tax is made.
The purpose of simple tax system
Overall, the committee has given 566 recommendations, which aim to simplify tax rules, reduce controversy and make the law more comfortable. Many of these suggestions have been prepared by taking feedback from taxpayers and experts.
If these recommendations are accepted, then compliance between people and institutions will be less and India’s tax system will become more reliable. Now, what steps the government takes on these suggestions and how the final income tax bill 2025 will be like, will keep an eye on taxpayers and tax professionals.