💰 New Income Tax Bill Introduced in Lok Sabha

Revised Income Tax Bill — Key Details & Changes

On August 11, 2025, Finance Minister Nirmala Sitharaman introduced a revised Income Tax (No. 2) Bill, 2025 in Lok Sabha, replacing the February draft after its withdrawal. The revised version incorporates almost all of the 285 recommendations made by the Parliamentary Select Committee, and includes 32 major changes in drafting, structure, and cross-references.
The new bill aims to replace the over-60-year-old Income-tax Act, 1961, simplifying and modernizing India’s tax law framework.

Sections have been reduced drastically — from 819 under the old act to just 536. Overall chapters have been trimmed to 23, aiming for clearer, streamlined legislation.
A Tax Year concept replaces the older Assessment Year model. mit human interface, reduce corruption, and improve compliance. Tax officials must issue notices and allow responses before taking any action.

The ₹12 lakh annual tax exemption, announced in the 2025 Union Budget, is retained under the new bill.
Refund reforms: Tax refunds can now be processed after the ITR deadline without penalties.
The timeframe for refunds is now based on when the return is filed, shifting away from earlier rigid timelines.
Select Committee proposals now ensure taxpayers receive TDS certificates promptly, enhancing transparency.

Retirement savings harmonized: Lump-sum and premature withdrawals from the Unified Pension Scheme (UPS) will now receive the same tax treatment as NPS, enabling equitable tax treatment and encouraging long-term savings through regulated norms.

The bill includes restrictions on anonymous donations to religious trusts that do not engage in social services, enhancing transparency and governance.