Panel Recommends Refund Relief for Late ITR Filers
A parliamentary panel reviewing the draft Income Tax Bill, 2025 has recommended that small taxpayers should be allowed to claim income tax refunds even if they fail to file their returns by the deadline. The suggestion comes as a relief for individuals earning below the taxable limit who often lose their deducted tax (TDS) due to missed filing dates.
At present, tax refunds are not granted if the return is not filed within the due date. The committee has advised removing this clause for low-income groups to ensure fairness and ease of compliance.
Over 560 Suggestions to Simplify the Bill
The draft Income Tax Bill spans over 4,500 pages, and the panel has put forward 566 recommendations. These aim to simplify tax law language, remove ambiguity, and align provisions with current administrative and judicial interpretations. The committee is working toward making the new tax framework more taxpayer-friendly and consistent with modern financial realities.
Benefits Proposed for Property Owners
One of the key proposals involves recalculating the standard deduction of 30% on property income. The panel suggests applying it on the full annual value after deducting municipal taxes. Additionally, it recommends allowing interest deductions on pre-construction loans for both self-occupied and rented homes—bringing it in line with existing tax practices.
Recommendations for MSMEs and NGOs
The panel has also proposed aligning the definition of micro and small enterprises with the MSME Act, easing compliance for small businesses. For non-profit organisations, it wants clearer definitions of “income” versus “receipts”, improved treatment of anonymous donations, and refined provisions that prevent unnecessary disputes over automatic tax obligations.
Towards a Smoother Tax System
Other significant recommendations include:
- Time-bound resolution of tax disputes
- Clarification on parent-subsidiary definitions
- Revised TDS rules on employee funds and digital transactions
- A more structured advance ruling system for foreign companies
The government is expected to review the panel’s inputs before finalising the Income Tax Bill, which could replace the over 60-year-old Income Tax Act, 1961.
