Government Withdraws Income Tax Bill, Planning Fresh Version
The Indian government has formally withdrawn the Income Tax Bill, 2025, which was introduced in the Lok Sabha on February 13. The decision follows a detailed review and feedback from a parliamentary select committee that identified several provisions needing revision.
Why Was the Bill Pulled Back?
Key areas flagged for changes include provisions related to house property income, deductions from salaries, and taxation of commercial property. The Select Committee, chaired by MP Baijayant Jay Panda, recommended amendments to improve clarity and fairness for businesses, nonprofit entities, and individual taxpayers. To ensure these suggestions are fully incorporated and avoid confusion, the government decided to withdraw the bill.
What Happens Next?
A revised version of the Income Tax Bill, 2025 will be presented in Parliament on August 11. This updated draft, already cleared by the Cabinet, will integrate the committee’s recommendations. The goal is to simplify the tax code, reduce ambiguity, and make compliance easier for both individuals and small businesses.
What the Reform Aimed For
The original bill aimed to replace the nearly six-decade-old Income Tax Act of 1961. Its objectives included streamlining tax laws, removing outdated provisions, reducing litigation, and using simpler language to make the law more accessible.
By withdrawing the bill now, the government signals its intent to ensure the reforms are comprehensive, balanced, and well-structured before moving forward.
