Lok Sabha Passes Updated Income Tax Bill to Ease Compliance
The Lok Sabha on Tuesday passed the revised Income Tax (No. 2) Bill, 2025, aimed at simplifying the country’s tax system and reducing compliance burdens for individuals and businesses. The bill was approved without debate.
Streamlined Tax System and Key Changes
Replacing the six-decade-old Income Tax Act of 1961, the updated legislation consolidates provisions into 536 sections spread across 23 chapters and 16 schedules.
Key reforms include:
- Allowing taxpayers to claim TDS refunds even if they miss filing deadlines, removing earlier penalties.
- Retaining the ₹12 lakh annual income exemption limit and keeping existing tax slabs unchanged.
- Clarifying definitions and aligning legal language for simpler understanding and application.
Pension Scheme Tax Harmonisation
The Taxation Laws (Amendment) Bill, 2025 was also passed, introducing uniform tax treatment for the Unified Pension Scheme (UPS) and the National Pension System (NPS). The amendment ensures that lump-sum withdrawals and early exits under UPS follow the same rules and benefits as NPS.
