The Indian government has withdrawn the Income-Tax Bill, 2025, to replace it with an updated version that incorporates most of the recommendations made by the Select Committee that was chaired by Baijayant Panda.
The new version will be introduced on Monday, August 11, 2025 in the House.
The originally proposed bill was introduced in the Lok Sabha on February 13, 2025, and intended to replace the six-decade-old Income-Tax Act, 1961, with simpler language and reduced penalties while maintaining the existing tax structure and promoting a more tax-friendly approach.
The government said it was withdrawing the I-T Bill, 2025, to avoid multiple versions of it and instead provide one, final, clear and updated version with all the changes included.
Also Read: Select Committee report on new Income Tax Bill to be tabled in LS
“Suggestions have been received which are required to be incorporated to convey the correct legislative meaning. There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing,” said the Finance Minister, Nirmala Sitharaman, who added that a fresh Bill will be introduced in the Lok Sabha in “due course” to replace the Income-Tax Act, 1961.
The Lok Sabha Select Committee had flagged various drafting errors in the new Bill, including those in Clauses 19, 20, 21, and 22, saying these changes were necessary for fairness, reducing ambiguity, and ensuring equitable tax treatment.
Clause 19, which deals with deductions from salaries – Schedule VII, proposed that a deduction for commuted pension, similar to that for employees, be allowed under “Income from other sources” for non-employees receiving pensions from a fund.
Clause 20, which deals with commercial property, had the phrase “occupied”, which the Committee said should be changed to “as he may occupy” to avoid taxing temporarily unused business properties as “house property” income.
In clause 21, which deals with annual value of property, the Committee identified drafting issues in 21(2) that could create ambiguity when valuing properties under vacancy. The panel suggested deleting the phrase “in normal course” and instead adding a clear comparison between actual rent received and “deeming rent”, which is a provision present in the current Act.
Lastly, in clause 22 that deals with deductions from income from house property, the Committee advised clearly stating in 22(1)(a), that the standard 30 per cent deduction should be computed on ‘annual value’ after deducting municipal taxes. In 22(2), it recommended extending the deduction for pre-construction interest to let-out properties, aligning it with the existing law.
Follow us
