New income tax bill passed in Lok Sabha.
In the winter session of Parliament, the Income Tax i.e. Income Tax (No. 2) Bill has passed in the Lok Sabha on Monday. Finance Minister Nirmala Sitharaman introduced the bill after which it was approved by the House with sounds. Let us tell you that this new Income Tax Bill (No. 2), Income Tax Act will replace 1961. Almost all the recommendations of the Select Committee have been included in this bill.
Why was the Income Tax Bill withdrawn 2025?
Let us tell you that earlier the Finance Minister introduced the Income Tax Bill, 2025 in the Lok Sabha on 13 February 2025. The Select Committee headed by BJP MP Baijayant Panda recommended some changes in the bill. After this, the Income Tax Bill, 2025 was withdrawn in the House on Friday. After this, the Income Tax (Number 2) Bill, 2025 was prepared to replace the Income Tax Act, 1961. Finance Minister Nirmala Sitharaman has informed in the House today that the committee has given 285 suggestions and most of them have been accepted.
What are Simple’s principles?
In February 2025, Finance Minister Nirmali Sitharaman named it Simple keeping in mind the major principles of the Income Tax Bill 2025. Simple’s principles were- ‘Streamlined structure and language (well-organized structure and language), integrated and concise (integrated and abbreviated), minimized litigation (minimum litigation), practical and transparent (practical and transparent), learn and adapt (teach and adapt) and Efficient tax reforms (skilled tax reform).
The specialty of the new income tax bill.
What is special in the new bill?
BJP MP Baijayant Panda has informed that this new draft simplifies the decades -old tax structure and helps individual taxpayers and MSME to avoid unnecessary litigation. Baijayant Panda said- “There have been more than 4,000 amendments in the Income Tax Act of 1961 and there are more than 5 lakh words. It has become very complicated. The new Bill simplifies it up to about 50 percent.” Income Tax (Number 2) Bill makes the language easier as well as clarifies the cuttings and strengthens cross referenceing between various provisions. The bill removes the ambiguities associated with home property income, including the standard deduction and pre-construction on home loans.
Some proposed changes in the new bill
- Relief on tax refund- Taxparens can also claim refund in case of late filing of returns. There will be no penalty for filing TDS late.
- Nil-TDS Certificate- Zero-TDS Certificate-Taxpayers who do not have tax liabilities, ie they do not pay income tax, they can claim NIL-TDS certificate in advance. It is applicable to both Indian and NRI taxpayers.
- Commuted Pension- Changed pension for some taxpayers, a clear pension payment (it was indirect mention in earlier draft) tax deduction. This applies to those who receive pension from specific funds, such as LIC pension funds.
- Explanation related to Property Tax – For calculating tax on income from home properties, the standard deduction under Section 21 has been fixed at 30 percent. The interest payable on the capital borrowed for purchasing, construction, repair etc. will also be reduced.
1. Under the old law, the annual value of the house (on which the tax was calculated) was based on the ‘appropriate required fare’ or actual obtained rent (for the partial part of the year), under the old law, in the event of the entire or partial year.
2. Under the new law, this assessment will be based on whatever is higher in two yogas – ‘proper required rent’ or real received/received rent, if a property or any part of it is rented. - Align MSME Definitions- Under the MSME Act (final amendment July 2020), micro and small enterprises are divided on the basis of investment and annual trading in machinery. Investment for micro enterprise will be less than Rs 1 crore and business will be less than Rs 5 crore. It will be Rs 10 crore and Rs 50 crore for small enterprises.
What will not change?
The biggest thing about the new income tax bill is that no change has been made in the current tax slab. The Finance Ministry also said that the main words and a phrase defined in the court decisions will remain. “
Also read- Amended Income Tax Bill passed in Lok Sabha, know the major recommendations of the Select Committee
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