Latest news with #IncomeTax(No.2)Bill
Mint
4 hours ago
- Business
- Mint
Parliament approves new Income Tax Bill 2025, set to replace 1961 Act after six decades
Parliament passes new Income Tax Bill to replace IT Act, 1961. The Income Tax Bill, once enacted, will replace the archaic 6-decade-old income tax law. The legislation will make tax law simple by reducing the number of chapters and wordage. Lok Sabha passes new Income Tax Bill in just 3 minutes The Income Tax Bill (No.2) 2025 - a major legislative move to replace the 63-year-old law governing income taxation for individuals and corporations - was passed in the Lok Sabha on Monday in just three minutes, without any debate. The Bill, which streamlines TDS, exemptions and other compliance-heavy provisions as also allows individuals to claim refunds without penalty on delayed filings, was passed as the opposition parties continued to disrupt proceedings over allegations of irregularities in the special intensive revision (SIR) of electoral rolls in Bihar. Finance Minister Nirmala Sitharaman, who had on August 8 withdrawn the Income Tax Bill, 2025 she had introduced in February, on Monday introduced an updated version incorporating recommendations made by a Parliamentary panel that scrutinised the legislation. Amid slogan shouting by the opposition, the bill was put to vote and passed by voice vote. The Bill will now go to the Rajya Sabha for approval and thereafter to the President for assent. It will become law once the Presidential assent is provided. The new bill reduces the size and complexity of the current Income Tax Act, drastically cutting the number of effective sections and chapters and nearly halving the word count. "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 Income Tax (No.2) Bill. It does away with the confusing concepts of assessment year and previous year, replacing them with easier to understand 'tax year'. According to the revised Bill, individuals will be allowed to claim TDS refund even if their return of income is filed beyond the statutory timeline provided for filing of the original income-tax return. Thus, the Finance Ministry has incorporated the provision of the existing Income Tax Act, 1961. The Income Tax (No.2) Bill provides for 'nil' TCS on Liberalised Remittance Scheme (LRS) remittances for education purposes financed by any financial institutions. Nangia Andersen LLP Partner Sandeep Jhunjhunwala said deductions in respect of certain inter-corporate dividends for companies opting for concessional rate of taxes have been re-introduced in line with the provisions of the existing Income-tax Act, 1961 The provisions relating to the carry forward and set-off of losses have been appropriately amended and the reference to the beneficial owner has been omitted to align with Section 79 of the Income-tax Act, 1961. "By enabling refunds for belated returns and harmonising definitions of Micro and Small enterprise with allied statutes, the Bill reflects a balanced, pragmatic, and taxpayer-oriented approach," Jhunjhunwala said. While the Bill has welcome changes for enhancing clarity and reducing litigations, there seems to be no significant changes made to contentious provisions surrounding search and seizure in the virtual digital space. The present act provides authorised officers to conduct search and seize assets and books of accounts of individuals who may be suspected to have any undisclosed income or documents in order to evade paying tax. This allowed the authority to break the lock on any door, box, or locker if they couldn't find their keys or had cause to believe that any books of accounts or undeclared valuables were being stored there. In the bill introduced in February, Clause 247 allows tax officers to bypass passwords and access digital platforms like emails and social media during searches if taxpayers refuse cooperation. It stipulates that an authorised officer, in consequence of information in his possession, has reason to believe, can "break open the lock of any door, box, locker, safe, almirah, or other receptacle for exercising the powers conferred by clause to enter and search any building, place, etc., where the keys thereof or the access to such building, place, etc., is not available, or gain access by overriding the access code to any said computer system, or virtual digital space, where the access code thereof is not available". This provision had sparked concerns around privacy. The updated bill states that tax authorities can "break open the lock of any door, box, locker, safe, almirah, or other receptacle or override the access code to any computer system ... where the keys thereof are, or the access to such building, place, etc., or the access code to such computer system ... is not available". While the 'digital space' is missing from the clause, it is included in the definition of computer systems. Tax experts believe that starting April 1, 2026, when the new income tax law comes into force, income tax officials could get the authority to access individuals' digital accounts, such as emails, social media, bank accounts, trading platforms, and online investments, if they suspect tax evasion.
Mint
7 hours ago
- Business
- Mint
Income Tax Bill 2025: From UPS benefits to commuted pension rules — top 5 things every pensioner must know
The Lok Sabha passed the revised Income Tax (No. 2) Bill, 2025 on Monday, August 11, a move towards replacing the six-decade-old Income Tax Act of 1961. Introduced by Finance Minister Nirmala Sitharaman in the Parliament, the bill aims to streamline and modernise the country's tax framework. It will now move to the Rajya Sabha and, upon securing Presidential assent, become law. Out of the several provisions mentioned under the proposed bill, some key measures are specifically aimed at pensioners. Here are the top 5 takeaways for pensioners — The revised bill incorporates the tax relief for Unified Pension Scheme (UPS) subscribers. As per the bill, a subscriber to the Unified Pension Scheme under the National Pension System (NPS) will receive a tax-free amount up to 60% of the total pension corpus at retirement, whether due to superannuation (regular retirement), voluntary retirement, or certain types of early retirement. This tax-free benefit applies only if the retirement payout follows the conditions set out in a government notification issued on January 24, 2025. Notably, these tax benefits are already available to NPS subscribers. The bill proposes a tax benefit for 'retirement benefit accounts", where the income from such accounts maintained in a notified country will be exempt from taxes. Under the revised Income Tax Bill, 2025, the entire amount of a commuted pension is now eligible for a full tax deduction. Previously, only salaried employees could avail of a complete tax exemption on commuted pensions. But now, everyone who has invested in an approved pension scheme will receive tax relief. The proposed law clarifies the tax applicability for partial withdrawals from pension schemes before maturity, which seeks to provide clarity and minimise disputes over the taxation rules regarding early withdrawals. The bill maintains the same deduction for family pensions, where either one-third of the pension or ₹ 15,000, whichever is lower, is deducted from taxable income. Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Taxpayers are advised to consult a qualified tax professional or refer to the official website of the Income Tax Department for accurate and up-to-date guidance before filing their returns.
Business Standard
8 hours ago
- Business
- Business Standard
Lok Sabha passes revised Income Tax Bill, 2025
The Lok Sabha on Monday passed the revised Income Tax Bill, 2025 without any debate. Union Finance Minister Nirmala Sitharaman had introduced the previous version of the Bill in the Lok Sabha in February, following which it was sent to a Select Committee for a review. The Select Committee submitted its recommendations on July 21. Following this, the government withdrew the Bill to incorporate the suggestions made by the committee. Sitharaman introduced the updated version the Income Tax (No. 2) Bill, 2025 in the Lower House yesterday. The Bill has around 2.59 lakh words compared with the 5.12 lakh words in the Income Tax Act, 1961. The number of chapters have been trimmed to 23 from 47 and the number of Sections has been cut to 536 from 819. The new Bill has also increased the number of tables to 57 from 18 and the number of formulae to 46 from six.
Time of India
21 hours ago
- Business
- Time of India
Lok Sabha approves updated I-T bill, to ease compliance burden
Lok Sabha NEW DELHI: Lok Sabha on Monday approved the Income Tax Bill 2025 - a key reform aimed at revamping the decades old income tax law for individuals and companies, making it simple for taxpayers and easing the compliance burden. Earlier, FM Nirmala Sitharaman introduced the revised and updated version of the I-T bill in Parliament, incorporating recommendations of the Select committee of Parliament. On Aug 8, FM had withdrawn the earlier bill, which was introduced in the house on Feb 13. The Select committee of the Lok Sabha headed by BJP's Baijayant Panda had examined the I-T Bill 2025 and adopted the report on the draft legislation last month. The parliamentary panel had suggested 285 recommendations on the draft legislation, aimed at simplifying and modernising the country's tax laws. "Almost all of the recommendations of the Select Committee have been accepted by govt. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately," according to the statement of Objects and Reasons of the Income Tax (No.2) Bill. " For TDS correction statements, the time period for filing statements has been reduced to two years from six years in the Income-tax Act, 1961. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like listen now on spotify samy Listen Now Undo I-T department sources said this is expected to reduce the grievances of deductees significantly. Flexibility has been provided in the new I-T bill for allowing refund claims in cases where the return is not filed on time, a move which is expected to come as a major relief for taxpayers. Tax experts said the reforms are expected to ease compliance for individuals, companies, MSMEs and promote a stable, predictable and transparent tax system, key for sustaining domestic consumption, attracting foreign investment and supporting growth. "The withdrawal of the earlier I-T bill and the introduction of a revised version demonstrates govt's responsiveness to stakeholder feedback and the Select Parliamentary committee's recommendations," said Gouri Puri, partner, Shardul Amarchand Mangaldas and Co. Puri said the original draft raised concerns about ambiguities, particularly regarding house property taxation, pension deductions, and the refund process for delayed filings. "The revised bill addresses these gaps to simplify interpretation, reduce disputes and promote fairness," said Puri. The new I-T Bill also aims to eliminate redundant and repetitive provisions for better navigation, reorganising sections logically to facilitate case of reference. It has opted for simplified language to make the law more accessible and has removed obsolete and redundant provisions for greater clarity. Mandatory investment and deposit of deemed accumulated income of 15% of regular income in specified modes has been done away with. The word "profession" has been added after "business" in clause 187 to enable professionals with total receipts exceeding Rs 50 crore in a year the facility of prescribed electronic modes of payment. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
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Business Standard
a day ago
- Business
- Business Standard
New Income-Tax Bill restores alternate minimum tax relief for LLPs
In a relief for non-corporate taxpayers, the government on Monday corrected an earlier drafting error, reinstating relief from the alternate minimum tax (AMT) for partnership firms and limited liability partnerships (LLPs) under the revised Income Tax (No. 2) Bill, 2025, presented in Parliament by Union Finance Minister Nirmala Sitharaman. The revised Bill, which incorporates almost all of the recommendations of the Select Committee chaired by Baijayant Panda, was passed by the Lok Sabha through a voice vote, without discussion. The House also approved the Taxation Laws (Amendment) Bill, 2025, which grants tax relief under the new Unified Pension Scheme, extends benefits to Saudi Arabia's Public Investment Fund, and clarifies block assessment rules following tax searches. Both Bills now move to the Rajya Sabha for consideration and will become law upon receiving Presidential assent. AMT, levied at 18.5 per cent plus cess and surcharge for non-corporate taxpayers, is intended to ensure high earners cannot fully offset their tax liabilities through exemptions. LLPs with only long-term capital gains (LTCG) income are otherwise taxed at 12.5 per cent. The earlier version of the Bill had omitted a critical reference to Chapter VI-A deductions in the AMT provisions for LLPs. This would have exposed LLPs — including those earning solely LTCG taxed at 12.5 per cent — to the higher AMT rate of 18.5 per cent plus cess and surcharge. The revised draft restores this reference in Clause 206, ensuring AMT applies only when total income is reduced by such deductions, consistent with the original intent. While the Select Committee made more than 285 recommendations, it did not propose altering the AMT framework for LLPs as contained in the first version of the Income Tax Bill, introduced in February. According to the Bill's statement of objects and reasons, alongside the committee's proposals, the government incorporated stakeholder suggestions to convey the proposed legal meaning more accurately, including 'corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing'. One significant Select Committee recommendation, however, has been dropped. This would have broadened transfer pricing scrutiny by allowing a company to be treated as an 'associated enterprise' if it exercised 'substantial influence' over another, even without meeting current shareholding or board control thresholds. The provision would have brought a larger set of inter-corporate transactions under transfer pricing rules, which are designed to ensure related-party dealings reflect market value and prevent profit shifting. Dinesh Kanabar, chief executive officer of Dhruva Advisors, said the earlier draft risked introducing subjectivity. 'The earlier Bill proposed that two 'enterprises' would be regarded as associated if at any time during the year there was common management or control, irrespective of the Act's specific definitions. It is now provided that only in specified circumstances will management and control be deemed common, and the test applies as at the end of the year. This removes subjectivity and the litigation that goes with it,' he said. The latest version of the Income Tax Bill also restores key tax benefits for charitable and religious trusts. It reinstates a provision that allows such entities to reinvest capital gains in new capital assets to claim exemption, as well as the option to apply unspent income in the immediately succeeding year without losing tax benefits. A senior Central Board of Direct Taxes official said: 'If a charitable or religious trust sells a capital asset – such as land, buildings, shares -- and makes a capital gain, it can avoid paying tax on that gain if it reinvests the proceeds in another capital asset for its charitable purposes. This treatment already existed under the Income-tax Act, 1961, and the new Bill retains the same rule.'
