fm-sitharaman-to-table-revised-income-tax-bill-2025

Union Finance Minister Nirmala Sitharaman is set to introduce the revised Income Tax Bill 2025 in the Lok Sabha today.

 

The updated legislation incorporates 285 suggestions from the Parliamentary Select Committee and aims to simplify tax processes while addressing shortcomings in the existing framework. Officials say the changes could reshape the country’s income tax structure.

 

Last week, the Income Tax Bill 2025, initially introduced in the Lok Sabha on 13 February to replace the Income Tax Act, 1961, was formally withdrawn by the government.

 

The new version, based largely on recommendations from the Select Committee chaired by BJP MP Baijayant Jay Panda, will be presented to avoid confusion caused by multiple drafts and to provide an updated document containing all agreed changes.

 

Panda said the proposed law would modernise India’s decades-old tax framework, reduce legal complexity and help individual taxpayers and MSMEs avoid unnecessary litigation.

 

“The current Income Tax Act of 1961 has undergone more than 4,000 amendments and contains over 500,000 words. It has become too complex. The new bill simplifies that by nearly 50 per cent — making it far easier for ordinary taxpayers to read and understand,” he said.

 

He added that the simplification would particularly benefit small business owners and MSMEs, who often lack the resources to navigate complicated tax rules.

 

The bill seeks to establish a fair and equitable system of direct taxation, ensuring there is no additional burden on the working and middle classes.

 

Slabs and rates have been revised to benefit all taxpayers, with the government saying the changes will reduce the tax burden on the middle class, leaving more disposable income to boost consumption, savings and investment.

 

The Finance Act 2025 raises the income threshold for claiming a tax rebate under section 87A of the Income Tax Act, 1961 for resident individuals under the new tax regime in section 115 BAC — from ₹7 lakh to ₹12 lakh. The maximum rebate has also been increased from ₹25,000 to ₹60,000.

 

Marginal relief will continue to apply for incomes slightly above ₹12 lakh. The Finance Ministry said the new bill will make filing taxes easier for ordinary citizens and small businesses alike.