Finance Minister Nirmala Sitharaman withdrew the Income Tax Bill 2025 from the Lok Sabha on August 8 after a parliamentary committee flagged several drafting flaws and areas needing clarity. Lawmakers tabled this bill on February 13 to replace the six-decade-old Income Tax Act, 1961. Withdrawal reflects a calculated pause before reintroducing a revised draft in Parliament on August 11.
Fresh Version to Incorporate Select Committee’s Guidance
Committee led by MP Baijayant Panda reviewed the bill and handed over 285 recommendations by July 21. Key suggestions include clearer rules for corporate entities and charitable trusts, reinstating certain deductions, and ensuring simpler interpretation of provisions. It also highlighted concerns with clauses covering house property, commercial property and salary deductions likely a major factor behind the withdrawal.
New draft aims to consolidate changes and avoid confusion from multiple versions. It strives to cut complexity nearly by half, benefiting the middle class, MSMEs and small businesses by making norms simpler, clearer and fairer. Government expects fresh version to ease compliance, boost savings, and help stimulate household consumption and investment. Parliamentary Affairs Minister confirmed sweeping changes from the Select Committee are being folded into the new text.
That move signals a shift from a one-size-fits-all overhaul to a more consultative approach. Taxpayers and stakeholders can expect a clearer, leaner law still evolving, but built on wider input and greater precision.
