- The new Income Tax (No. 2) Bill, 2025, which will replace the Income Tax Act of 1961, has been passed by a voice vote in the Lok Sabha.
- The bill is based on the “S.I.M.P.L.E.” principles, standing for a ‘Streamlined, Integrated, Minimised litigation, Practical, Learn, and Efficient’ tax reform.
GG News Bureau
New Delhi, 11th Aug: The Lok Sabha has passed the new Income Tax (No. 2) Bill, 2025, by a voice vote during the Parliament’s winter session. The bill, presented by Finance Minister Nirmala Sitharaman, is a major legislative move aimed at replacing the complex Income Tax Act of 1961 with a simplified and streamlined framework.
According to the government, the new legislation is guided by the “S.I.M.P.L.E.” principles: a streamlined structure and language, integrated and concise provisions, minimized litigation, practical and transparent application, a learn-and-adapt approach, and efficient tax reforms. This new bill, which incorporates most of the 285 suggestions made by a select committee, aims to reduce the complexity of the tax code by about 50%, particularly benefiting individual taxpayers and MSMEs.
BJP MP Baijayant Panda, who chaired the select committee, highlighted that the 1961 Act had over 4,000 amendments and 500,000 words, making it extremely complicated. The new bill seeks to clarify the language, strengthen cross-referencing between various provisions, and provide clarity on deductions related to house property income.
Among the notable changes are new provisions for taxpayers, including the ability to claim tax refunds even when filing returns late and the elimination of penalties for late TDS filings. The bill also introduces a Nil-TDS certificate for taxpayers with no liabilities, applicable to both Indian residents and non-residents. Furthermore, it provides clear tax deductions for commuted pension payments for specific taxpayers and clarifies how property tax will be calculated. The Finance Ministry confirmed that the existing tax slabs will remain unchanged.
