Latest news with #Income-Tax(No.2)Bill
Indian Express
5 days ago
- Business
- Indian Express
New income tax Bill passed in Parliament: key features, what changes
With an aim to replace the over six-decade old Income-tax Act, 1961, the government introduced a new Income-tax Bill, 2025 in February, which was then sent to Parliament's Select Committee. After the submission of a report by the Select Committee of Parliament on July 21, the government introduced a new version, the Income-Tax (No.2) Bill, 2025, on Monday incorporating most recommendations of the Committee, headed by BJP leader Baijayant Panda, and suggestions by other stakeholders. The new I-T Bill is likely to come into effect from April 1, 2026. Correcting anomalies and drafting errors in the updated 624-page Income-Tax (No.2) Bill, 2025, which was passed by Parliament on Tuesday, the government undertook one of the most significant changes by removing the clause which would have disallowed taxpayers from availing refunds if they filed their income tax returns after the deadline. The updated Bill also corrected drafting errors in provisions related to capital gains tax for Limited Liability Partnerships (LLPs), and anonymous donations to religious-cum-charitable trusts. Return filing, TCS on LRS The first draft of the Bill, introduced in February, had included a provision — Clause 263(1)(a)(ix) — that implied that a taxpayer could only claim a refund if he or she had filed the tax return on or before the due date. The new version has completely removed this provision, allowing individuals to claim refund even if income tax return is filed after the deadline. 'This represented a significant departure from the established legal position, where refunds could be claimed even for belatedly filed returns. Recognising the potential for this to cause undue hardship and create ambiguity, the newly introduced bill has completely omitted this restrictive clause,' Amit Maheshwari, Tax Partner, AKM Global said. The new Bill also clarified that there will be nil TCS on Liberalised Remittance Scheme (LRS) remittances for education purposes financed by any financial institutions, a provision that had gone missing in the earlier version and is now aligned with the recently introduced proviso to Section 206C(1G) of the existing Act. Changes for corporate taxpayers The Bill has also corrected other drafting errors such as those related to inter-corporate dividend deductions for companies availing concessional tax rates. The applicability of the Alternate Minimum Tax (AMT) for LLPs has been aligned with the existing provisions of the I-T Act by removing the expanded scope that would have included LLPs not claiming specific tax benefits and attracted a higher rate of 18.5 per cent as against the preferential rate of 12.5 per cent. The Bill has also allowed taxpayers who do not have any I-T liability to obtain a nil-TDS certificate. Additionally, the Bill has been tweaked to remove ambiguities related to transfer pricing provisions along with changes relating to the carry forward and set-off of losses. The reference to the beneficial owner has been omitted to align with Section 79 of the Income-tax Act, 1961 along with a clarification of applicability of 30 per cent standard deduction after deduction of municipal taxes while calculating house property income. The government has corrected the anomaly regarding donations linked to non-profit organisations in line with the recommendation of the Select Committee. Exemption has been allowed to NPOs for 5 per cent of the 'total' donation instead of just 5 per cent of 'anonymous' donations, as is the case in the existing Act. Tax year, digital searches The new Bill introduces the concept of 'tax year', which has been defined as the 12-month period beginning April 1. The concept was introduced in the first draft in February. The new Bill removes redundant provisions and archaic language and reduces the number of Sections from 819 in the Income Tax Act of 1961 to 536 and the number of chapters from 47 to 23. The number of words has been reduced from 5.12 lakh to 2.6 lakh in the new Income Tax Bill, and 39 new tables and 40 formulas have been introduced. 'These changes are not merely superficial; they reflect a new, simplified approach to tax administration. This leaner and more focused law is designed to make it easy to read, understand and implement,' Finance Minister Nirmala Sitharaman said while replying to a short debate in the absence of the Opposition in Rajya Sabha on Tuesday. The government has, however, retained the contentious definition of 'virtual digital space' — the powers to call for information by income tax authorities during surveys, searches and seizures including e-mail servers, social media accounts, online investment, trading and banking accounts, remote or cloud servers and digital application platforms. Sitharaman said the tax department will bring out standard operating procedure (SOP) for handling personal digital data seized during searches. Taxation Laws (Amendment) Bill Separately, the government also brought in the Taxation Laws (Amendment) Bill, 2025 that amends the Finance Act, 2025. It has exempted income from dividend, interest, long-term capital gains or other incomes from investments made by the 'Public Investment Fund of the Government of the Kingdom of Saudi Arabia' and its wholly-owned subsidiaries which make investment, directly or indirectly, out of the Fund in India under clause (23FE) of the Income-tax Act. Saudi's Public Investment Fund has over $925 billion assets under management and was notified for I-T exemption in November 2022. However, the Fund had faced some restrictive norms related to investments through various subsidiaries. With this amendment, the government has granted complete income tax exemption to Saudi's Fund by specifying its name explicitly in the Act as has been done earlier for the Abu Dhabi Investment Authority (ADIA). The Taxation Laws (Amendment) Bill also extended income tax benefits under the market-linked national pension system (NPS) to the guaranteed unified pension scheme (UPS) by allowing tax-free withdrawal of lump sum payments or the accumulated UPS corpus, up to 60 per cent, at the time of retirement.
Economic Times
6 days ago
- Business
- Economic Times
New Income Tax Bill clears Lok Sabha: Key changes you must know
In a raucous Lok Sabha session marked by loud opposition protests, the government passed the Income-Tax (No. 2) Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025 without any debate. The bills aim to modernize India's tax code and extend pension tax benefits, but the no-discussion passage has drawn sharp criticism from opposition parties. Show more 04:57 02:32 04:12 03:42 05:28 10:08 12:50 03:53 03:01 01:59 01:55 03:11 05:07 03:37 05:03 03:59 05:00 05:46 15:13 03:50 03:35 08:36 13:56
Time of India
6 days ago
- Business
- Time of India
New Income Tax Bill clears Lok Sabha: Key changes you must know
In a raucous Lok Sabha session marked by loud opposition protests, the government passed the Income-Tax (No. 2) Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025 without any debate. The bills aim to modernize India's tax code and extend pension tax benefits, but the no-discussion passage has drawn sharp criticism from opposition parties. Show more Show less
India Today
6 days ago
- Politics
- India Today
Parliament Monsoon Session 2025 Live: Opposition continues 'vote chori' protest on last day of session
Parliament Session Day 17 Live Updates: Both Houses of Parliament entered their last day on Tuesday for the monsoon session. As the parliament reconvened, the Opposition leaders continued their protest against the voter list manipulation. Yesterday, the Lok Sabha passed four key bills: the Income-Tax (No. 2) Bill, 2025; the Taxation Laws (Amendment) Bill, 2025; the National Sports Governance Bill; and the National Anti-Doping (Amendment) Bill, amid continued opposition protests. The Opposition MPs were not present during the same as they were detained during a protest march from Parliament House to the Election Commission, which was stopped midway. "The farmer cannot even recover the cost of production for his crops... The government talks about doubling the crop production and the income of farmers. The farmers are suffering losses and committing suicides... We demand an MSP for onions," says Shiv Sena (UBT) MP Arvind Sawant. (Source: ANI) Along with voter list manipulation, the opposition also protested, demanding a Minimum Support Price (MSP) for onions in order to support farmers. Several MPs were seen wearing garlands made of onion as a symbol of protest. Protesting MPs, including Priyanka Gandhi, were seen wearing T-shirts featuring Minta Devi, a voter allegedly listed as 124 years old in the Election Commission's voter list. Before adjournment, the Rajya Sabha adopted the motion moved by Minister Piyush Goyal to elect one member from amongst the Members of the House to be a member of the Tea Board, Coffee Board and Spices Board. The Rajya Sabha proceedings have been adjourned till 2pm today. The Lok Sabha has been adjourned till 12 pm today. "Opposition has the right to protest against any issue, but it must be within the limits of law... As far as SIR is concerned, it is a welcoming step. They (opposition) are hindering the House proceedings just to mislead people for their political gain," says BJP MP Damodar Agarwal on the SIR row. As the monsoon session entered its last day, the Opposition leaders continued their protest outside the Parliament against voter list manipulation. Top INDIA bloc leaders including Sonia Gandhi and Mallikarjun Kharge, led the protest against the Bihar voter list.
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First Post
7 days ago
- Business
- First Post
Income Tax Bill 2025 passes Lok Sabha: What are the new provisions? How do you benefit?
The Income-Tax (No.2) Bill, 2025 seeks to replace the Income Tax Act, 1961. The development comes days after Finance Minister Nirmala Sitharaman withdrew the previous draft of the bill in the Lok Sabha. But what do we know about the changes in the bill? Why was the earlier bill withdrawn? How do you benefit? read more Union Finance Minister Nirmala Sitharaman said the changes of the Select Committee had been incorporated. PTI File The Lok Sabha on Monday passed the new income tax bill. The Income-Tax (No.2) Bill, 2025 seeks to replace the Income Tax Act, 1961. The development comes days after Finance Minister Nirmala Sitharaman withdrew the Income Tax Bill, 2025, in the Lok Sabha. But what do we know about the changes in the bill? Why was the earlier bill withdrawn? How do you benefit? Let's take a closer look: Why was the earlier bill withdrawn? The government had withdrawn the bill on Friday. It said it would bring in a new version of the bill after including changes recommended by the select committee headed up by senior BJP member Baijayant Panda. STORY CONTINUES BELOW THIS AD The bill was reportedly withdrawn to avoid confusion about the different versions circulating. 'Almost all of the recommendations of the Select Committee have been accepted by the government. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately,' said the statement of objects and reasons of the bill. 'There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing. Therefore, a decision has been taken by the government to withdraw the Income-tax Bill, 2025 as reported by the Select Committee. Consequently, Income-tax (No. 2) Bill, 2025 has been prepared to replace the Income-tax Act, 1961,' the statement said. The Select Committee, chaired by Baijayant Panda, had suggested a host of changes in the Income-tax Bill, 2025, which was introduced in the Lok Sabha on February 13. Panda said the Income Tax Act had become too complex and the bill simplifies the tax code. The committee made 285 suggestions, most of which have been accepted, Sitharaman said. What do we know? The bill will take effect from April 1, 2026. It begins by making the language easier for the layman to read. The committee had suggested allowing refunds even if the Income Tax Return was filed after the due date. The earlier version of the bill had denied refunds if ITR was filed after the due date. It also allows penalties to be waived in case of accidental non-compliance. STORY CONTINUES BELOW THIS AD The committee also suggested no penalty on late filing of Tax Deducted at Source. Those who have to pay no tax – both Indians and NRIs – can apply for a 'nil certificate' in advance. The bill will take effect from April 1, 2026. It begins by making the language easier for the layman to read. Representational image. It also does away with terminologies of 'Financial Year' and ' Accounting Year' in favour of the 'Tax Year.' Under the current law, tax on income for the previous year is paid during this year. However, now tax on income will be paid that very year itself. Another change suggested by the Select Committee is the restoring the 80M deduction for companies relating to intercorporate dividends. This provision had been missing in the previous version of the draft. Companies were allowed to choose the 22 per cent tax rate in order to give up certain exemptions. However, this raised concerns about dual taxation given the way certain companies are structured. STORY CONTINUES BELOW THIS AD It makes clearer the definitions of 'capital asset', 'micro and small enterprises', and 'beneficial owner'. MSMEs have been previously defined under the MSME Act. A micro enterprise is one that has an investment of less than 1 crore and a turnover of 5 crores. A small enterprise has been defined as having an investment of under Rs 10 crore and a turnover of Rs 50 crore. It also set a 30 per cent standard deduction on tax on income from rental properties. The interest payable on borrowed capital to buy, build, repair a property can also be deducted from the rental property. The Finance Ministry earlier said 'key words' and 'phrases defined in court rulings (will) remain'. The Lok Sabha also passed the Taxation Laws (Amendment) Bill, 2025 which seeks to amend the Income-tax Act, 1961 as well as the Finance Act, 2025. It aims to provide tax exemptions to subscribers of the Unified Pension Scheme. The government in July announced that all tax benefits available under the New Pension Scheme (NPS) shall apply to the Unified Pension Scheme (UPS), which was implemented from April 1, 2025. STORY CONTINUES BELOW THIS AD It also seeks to give tax benefits to public investment funds of Saudi Arabia which is investing in India. These Bills were passed without any debate amid vociferous protest by members of Opposition over revision of electoral rolls in Bihar. After the passage of these bills by voice vote, the Lok Sabha was adjourned for the day. The bills needs to be passed by the Rajya Sabha – after which it will go to President for Droupadi Murmu for her assent. What do experts say? Experts have praised the changes in the new bill. Rajesh Gandhi, partner, Deloitte India, told Financial Express that the proposals for tax benefits by pension funds and sovereign funds in the infrastructure sector are similar to the existing tax law. Experts have praised the changes in the Bill. '…the provisions have been drafted in a more structured and concise manner. The government could have considered industry suggestions while drafting the proposals including extension of tax benefits to holding companies setup prior to 2021, allowing reinvestment of dividend income within the group without triggering double taxation of dividend income, extension of tax exemption to indirect share transfers, extension of tax benefit to capital gains from unlisted bonds / debentures as well as removal of withholding tax on exempt income earned by such funds', Gandhi said. STORY CONTINUES BELOW THIS AD Dinesh Kanabar, CEO, Dhruva Advisors, added that the new bill has witnessed some very welcome changes. 'There were a number of provisions against which representations were made to select committee. These have now been accepted in the Bill presented today. To give a few examples, the provisions of levying Alternate Minimum Tax on LLPs has been done away with, the rigours placed on Charitable Trust have been removed, the provisions of Transfer Pricing and the definition of Associated Enterprise to whom these provisions apply, have been relaxed. A set of very welcome changes. Glad that the representations to the Select Committee have borne fruit'. With inputs from agencies
