In a significant legislative action, the government has formally withdrawn the Income Tax Bill 2025, and it will be introduced in the Lok Sabha on February 13, 2025. As the government plans to introduce a new and updated version of the bill on August 11, most of the recommendations of the select committee headed by Baijayant Panda are expected to be incorporated in it.
Why Was the Original Bill Withdrawn?
That version of the Income Tax Bill, which was supposed to replace the decades-old Income Tax Act of 1961, was drafted to update India’s tax structure. Given the numerous suggestions sent by various stakeholders and parliamentary amendments, there was a case for restructuring the original draft rather than passing several amendments.
India Today TV quoted sources as saying that the main objective of this move is to prevent mixing of versions and to have the latest draft as far as possible in the House for debate.
What’s New in the Revised Bill?
The revised one will include the majority of the suggestions of the Select Committee headed by Baijayant Panda. Albeit no concrete specifics seem to be provided so far, the recommendations are likely to entail:
- Streamlined tax slabs and taxation process
- More compliance steps with online tracking
- Measures to seal loopholes and control tax evasion
They will bring this amended draft to Lok Sabha on August 11, and MPs will be able to consider a single, comprehensive draft instead of having to wrangle between the original draft in February and the amendments to that.
The Road Ahead for Tax Reform
A major change to the reform is to replace the 1961 Act, which had the potential to change the way taxes are calculated and paid by people and organisations. The bill is likely to be heavily debated once it is introduced, and some of the provisions may include those affecting middle-class taxpayers and tax rates charged to corporations.
Provided it is adopted, the Income Tax Bill 2025 has the potential to become one of the biggest legislative changes in India’s economic history, putting the country’s tax system on par with modern reality.
