Withdrawn Income Tax Bill 2025 - Anticipated Changes in Revised Proposal
A New Era for India's Tax System: The Revised Income Tax Bill, 2025
In a significant move, the Centre has withdrawn the Income Tax Bill, 2025, with plans to reintroduce a revised and updated version on August 11, 2025. The new bill, designed to modernise and simplify India's tax laws, promises to bring numerous revisions and updates, replacing the nearly 65-year-old Income Tax Act, 1961.
The new bill, if enacted, will introduce progressive tax slabs and a larger rebate structure, easing the burden on middle-class taxpayers. Under the new regime, salaried individuals will pay no tax on income up to Rs 12.75 lakh[1][3]. The bill also employs straightforward language, logically restructures sections, and removes duplicative and archaic provisions to improve clarity and reduce ambiguities that caused disputes under the old law[1][4].
The bill continues and enhances faceless assessment and digital proceedings to minimize personal interface, promoting transparency in tax administration[1]. It aims to unify tax years and assessment processes to improve compliance and reduce disputes with clearer definitions and revised rules[1]. A significant revision deletes a controversial clause from the earlier draft that barred refunds if returns were filed late. Now, refunds can be claimed even if returns are filed after the deadline due to reasonable causes such as illness or technical issues[2][5].
Capital gains provisions have been reorganised for simplicity, and cryptocurrencies and other virtual digital assets are now explicitly classified as taxable capital assets to remove ambiguity[4]. The bill also brings clearer rules regarding property-related taxation and addresses refund and compliance issues for investors[2].
Industry analysts believe that the bill may be strengthened and made more practical before enactment, fostering greater compliance. The bill is expected to include stiff impediments against tax evasion without complicating the process[6]. The Centre's decision to recalibrate the Income Tax Bill demonstrates its adaptive governance style, aimed at creating a tax regime that is fair, growth-oriented, and transparent[7].
More reliefs and exemptions for startups and small and medium enterprises (SMEs) are anticipated in the new bill[7]. However, some quarters opposed the bill due to concerns about complex or potentially unfair provisions[8]. The government opted to withdraw the bill to address these issues at length[9].
The new version of the Income Tax Bill, to be introduced on August 11, 2025, is expected to include further simplification of tax slabs and rates for both individuals and corporations[10]. The bill aims to establish uniformity in taxing digital transactions and has far-reaching implications for India's fiscal policy and individual financial planning[11].
As the bill is debated and discussed in both Houses of Parliament, tax practitioners, corporates, and common masses await its detailed provisions with interest. The new bill, if passed, is expected to come into effect from April 1, 2026[1][5].
[1] Times of India
[2] The Hindu
[3] Business Standard
[4] Livemint
[5] Financial Express
[6] Economic Times
[7] India Today
[8] Business Standard
[9] The Hindu
[10] Financial Express
[11] India Today
The revised Income Tax Bill, 2025, set to be introduced on August 11, 2025, promises to be a significant milestone in India's business and finance sector, bringing about reforms in tax policy-and-legislation. The bill is expected to foster greater compliance with the inclusion of stiff barriers against tax evasion and a focus on transparency in tax administration. This bill will not only impact Indian politics through its implications for fiscal policy but also influence individual financial planning.
