Latest news with #NewIncomeTaxBill2025
Time of India
3 days ago
- Business
- Time of India
What GST 2.0 means for you: Two slabs, lower taxes by Diwali- how will it impact your wallet
What GST 2.0 means for you: Two slabs, lower taxes by Diwali- how will it impact your wallet PM Modi's double Diwali promise, says next-generation GST with much lower taxes soon PM Modi's double Diwali promise, says next-generation GST with much lower taxes soon New Tax regime 2025: Here's how much you are going to save from FM's ₹12L booster dose| Explained New Tax regime 2025: Here's how much you are going to save from FM's ₹12L booster dose| Explained New Income Tax Bill clears Lok Sabha: Key changes you must know New Income Tax Bill clears Lok Sabha: Key changes you must know New Income Tax Bill 2025 proposes major simplification; Reduces sections, chapters, and word count
Time of India
7 days ago
- Business
- Time of India
What is the New Income Tax Bill 2025? Income Tax Act 1961 to be replaced; top points taxpayers should know
Finance Minister Nirmala Sitharaman presented the updated version of the I-T bill to Parliament. The New Income Tax Bill has been passed by the Lok Sabha, marking a significant reform to modernise the longstanding income tax legislation for both individuals and corporations. The New Income Tax Bill 2025 aims to simplify tax procedures and reduce compliance requirements for taxpayers. Finance Minister Nirmala Sitharaman presented the updated version of the I-T bill to Parliament, which included changes suggested by the Parliamentary Select Committee. She had previously withdrawn the initial bill, introduced on February 13, on August 8. The Parliamentary Select Committee, under the leadership of BJP member Baijayant Panda, reviewed the I-T Bill 2025 and finalised their report on the proposed legislation in the previous month. "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 Objects and Reasons section of the Income Tax (No.2) Bill. The parliamentary committee proposed 285 suggestions to streamline and update the taxation framework. New Income Tax Bill 2025 : Top points to know The proposed legislation reduces text volume and sections by approximately 50%, presenting provisions in a more straightforward and comprehensible manner. It simplifies the taxation timeline by eliminating the complex distinction between assessment year and previous year, introducing a unified "tax year" concept. The revised I-T bill introduces provisions for taxpayers to claim refunds even when returns are submitted after deadlines, which should provide significant relief to individuals filing their taxes. The New Income Tax Bill 2025 retains existing provisions for carrying forward losses, provides tax relief on anonymous donations to religious trusts, and adjusts MSME (micro, small and medium enterprises) classifications to align with the MSME Act, incorporating the panel's suggested modifications. The duration for submitting TDS correction statements has been shortened to two years from the previous six years under the Income-tax Act, 1961. According to I-T department officials, this reduction should substantially decrease complaints from deductees. The New Income Tax Bill has additionally provided explicit clarification regarding deductions applicable to commuted pension and gratuity payments received by family members. Tax experts indicated that the reforms would simplify compliance procedures for individuals, organisations, MSMEs whilst fostering a reliable, foreseeable and lucid taxation framework, essential for maintaining domestic spending, drawing overseas investments and backing economic expansion. Gouri Puri, partner, Shardul Amarchand Mangaldas and Co noted that the initial proposal created uncertainty, particularly concerning residential property taxation, pension deductions and reimbursement procedures for late submissions. "The revised bill addresses these gaps to simplify interpretation, reduce disputes and promote fairness," said Puri. The updated I-T Bill seeks to remove unnecessary and duplicate clauses for improved navigation, systematically reorganising sections for easier reference. It employs straightforward terminology to enhance accessibility and has eliminated outdated provisions to achieve better clarity. The requirement for compulsory investment and deposit of deemed accumulated income, previously set at 15% of regular income in designated modes, has been eliminated. Additionally, clause 187 has been expanded by incorporating the term "profession" following "business", allowing professionals whose total receipts surpass Rs 50 crore annually to access prescribed electronic payment methods. "The withdrawal of the earlier I-T bill and the introduction of a revised version demonstrates the government's responsiveness to stakeholder feedback and the Select Parliamentary committee's recommendations," said Gouri Puri said. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
News18
12-08-2025
- Business
- News18
Explained: How The Latest Tax Bill 2025 Changes House Property Income Rules
Last Updated: Revised Income Tax Bill clarifies 30% deduction post-municipal tax and extends pre-construction interest benefit to let-out homes New Income Tax Bill 2025: Clause 22 of the revised New Income Tax Bill, 2025, has addressed two long-pending ambiguities in the taxation of 'Income from House Property." 1. Standard Deduction Clarification The Bill now explicitly states that the 30% standard deduction will be calculated on the net annual value—that is, after deducting municipal taxes from the annual value determined under Clause 21. In the earlier draft, it was unclear whether the deduction applied before or after municipal tax deduction, raising concerns it could be taken on the gross annual value. The Lok Sabha Select Committee recommended this amendment to preserve fairness and align the new law with existing provisions under Sections 23 and 24 of the Income-tax Act, 1961. Under current law, interest on borrowed capital for acquiring or constructing a property can be claimed as a deduction, including pre-construction interest spread over five equal annual instalments. This benefit applies to both self-occupied and let-out properties. What It Means for Homeowners Tax experts say these clarifications prevent potential disputes and ensure the computation process remains consistent with long-established practice. Experts Take: Chartered Accountant Abhishek Soni, co-founder of Tax2Win, said: 'A let-out house property is one that is rented out or leased to another party. The rental income from such a property is taxable under 'Income from House Property'. Individuals can claim tax deductions on municipal taxes paid, standard deduction (30% of net annual value), and interest on home loans." CA (Dr.) Suresh Surana explained to The Economic Times: Under the current Income-tax Act, 1961, Sections 23 and 24 govern the computation of 'Income from House Property." Section 23 allows municipal taxes actually paid to be deducted from the annual value to arrive at the net annual value, and Section 24(a) allows a standard deduction of 30% on this net value. However, the original draft of the Income-tax Bill, 2025, did not clarify whether the 30% deduction was to be applied before or after municipal taxes, raising concerns it might be calculated on gross annual value. The Select Committee's recommendation now ensures the 30% standard deduction applies to the annual value after municipal taxes—aligning with existing practice. About the Author Aparna Deb Aparna Deb is a Subeditor and writes for the business vertical of She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, More Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Time of India
11-08-2025
- Business
- Time of India
New Income Tax Bill 2025 introduced in Parliament: What are the top Parliamentary panel suggestions being included? Check details
The Income-Tax Bill, 2025 was designed to update and simplify India's taxation system. New Income Tax Bill 2025: Finance Minister Nirmala Sitharaman has introduced modified New Income Tax Bill 2025 in Parliament on Monday. The government had officially withdrawn the Income-Tax Bill, 2025 on Friday, which had been presented in the Lok Sabha on February 13 this year as a replacement for the current Income-Tax Act, 1961. The Income-Tax Bill, 2025 was designed to update and simplify India's taxation system, replacing legislation that had been in effect for over 60 years. The proposal included a revised structure, provisions for digital taxation, systems for resolving disputes, and initiatives to expand tax collection through technological and data-driven methods. The parliamentary committee's feedback on the draft necessitated several modifications. A new version, which includes the majority of 285 recommendations provided by the Parliamentary Select Committee led by BJP MP Baijayant Panda, was presented on Monday, August 11. According to an ET report, officials indicated that the withdrawal was necessary to avoid any confusion that might arise from multiple versions circulating, and to present a single comprehensive draft incorporating all approved changes. New Income Tax Bill 2025: Top recommendations of Parliamentary Select Committee The Parliamentary Select Committee, comprising 31 members, presented their comprehensive 4,575-page findings last month. Their recommendations include both small adjustments and 32 significant modifications. The principal suggestions put forward include: * A revised definition of "beneficial owner" has been proposed, enabling individuals to carry forward losses when they receive direct or indirect share benefits during the tax year. * The committee advocates reinstating the inter-corporate dividend deduction, which was absent in the initial draft. Additionally, they suggest implementing a standard 30% deduction, calculated after municipal tax deductions, whilst pre-construction interest deductions could be extended to include let-out properties. To simplify tax compliance for individual taxpayers, the recommendations include: * Issuing 'Nil' tax deduction certificates * Allowing discretionary waiver of penalties for unintentional non-compliance * Facilitating refunds in delayed ITR submissions for small taxpayers * The committee has additionally requested enhanced clarity regarding the definition of non-performing assets (NPAs) to minimise prolonged disagreements in tax and banking interpretations. The proposal advocates for precise definitions of "parent company" whilst establishing appropriate provisions for non-profit organisations and religious-cum-charitable trusts. The committee suggests that anonymous contributions should not affect their eligibility for tax exemptions. Additionally, it recommended eliminating remaining references to the Income-Tax Act, 1961, to create a comprehensive and dispute-resistant new code. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
Economic Times
07-08-2025
- Business
- Economic Times
No more partial treatment to pensioners when it comes to commutation of pension in the New Income Tax Bill, 2025
ET Online Good news for pensioners: Equitable tax treatment of pensioners likely in the new income tax bill 2025; Here's what the Lok Sabha Select Committee proposed Good news for pensioners as the Lok Sabha Select Committee identified a gap in the tax treatment of commuted pension for different types of recipients and thus recommended fixing it in the Direct Income Tax Bill, 2025. The issue was that the tax treatment for commuted pension was not equitable i..e same for all types of pensioners. For government employees commuted pension was fully exempt from tax, for private sector employees it was partially exempt from tax and for non-employees no tax exemption or deduction was even available. This unequal treatment is now proposed to be fixed. Non-employee pensioners can also include employees contributing to a pension plan outside of their employment like LIC Pension Fund, etc. Read below to know the full details. What did the Lok Sabha Select Committee say about commuted pension? In the Direct Tax Bill 2025, the Lok Sabha Select Committee said: Clause No 19: Deductions from salaries (Schedule VII) 'The Committee, after a careful review of Clause 19, identified a gap in the equitable tax treatment of commuted pension for different types of recipients. The Committee, therefore, recommended that a deduction for commuted pension, similar to that available to employees under Clause 19, be explicitly allowed under the head "Income from other sources" for non-employees who receive such pension from a fund. Accordingly, the Committee finds no further modifications are necessary for Clause 19 and recommend the acceptance of its remaining provisions as drafted.' Also read: No more higher tax on vacant property as recommended in New Income Tax Bill 2025 due to suggestions by select committee What does this mean? Commutation of pension means that the employee is getting a lump sum withdrawal from the pension Sharma, Company Secretary and Partner, Jotwani Associates explains what the proposed amendment in new tax bill 2025 is about: 'When non-employee category individuals received commuted pension from an approved fund, that income was taxed entirely under the head 'Income from other sources,' with no explicit provision for exemption or deduction. This created a disparity in tax treatment, wherein two individuals receiving identical pension benefits from similar sources are taxed differently solely on the basis of their employment status. Recognizing this inequity, the Committee has proposed that a parallel deduction be explicitly allowed under the heads of income 'Income from other sources' for non-employees who receive commuted pension from a fund set up by an insurer.' How does taxation of commuted pension works for private sector employees and what did the new tax bill 2025 say about them? Amarpal Chadha, Tax Partner, EY India, explains: 1. 'Currently, as per the provisions of Income Tax Act, 1961, any commuted pension received by Central/State Government employees or employees of local authority is exempt from tax. In case of employees of any other employer (private), the exemption would be as follows: In case the employee receives gratuity – 1/3rd of commuted value of pension is exempt In any other case – 1/2 of the commuted value of pension is exempt 2. Furthermore, any payment in commutation of pension received from an IRDA approved pension scheme of a life insurance company is also tax exempt. This covers both salaried employees and non-employees like professionals, self-employed persons, explains: 'In the Income tax Bill 2025, it was proposed to continue the exemption (by way of deduction from salary income) for commutation of pension received from IRDA approved pension scheme for salaried employees only. The Select Committee has, therefore, recommended to extend similar tax exemption to non-employees by way of specific deduction under 'Income from other sources' head. This will clear any ambiguity on taxation of such receipts (which, in any case, is a capital receipt) in the hands of non-employees.' Chartered Accountant Suresh Surna agrees with Chadha and adds: 'For all other recipients, including non-employees and those not covered by the specified schemes, the Direct Tax Bill 2025 now provides a full deduction under Section 93(1)(g) for the entire amount received in commutation of pension.' Who are considered as non-employees for the purpose of commuted pension under new tax bill 2025? Surana explains that in the context of Clause 93(1)(g) of the Income-tax Bill, 2025, the term 'non-employees' may reasonably extend to include individuals such as private sector employees whose employers do not operate a pension scheme or fund, but who have independently invested in an approved pension fund such as the LIC Pension Fund or similar notified funds under clause 10 (23AAB) of the Income-tax Act, to Sharma, non-employees in the context of the tax bill 2025 can mean independent professionals, legal heirs, nominees, or other recipients who are not in an employer-employee relationship with the pension contributing organization. Sharma explains: 'The Committee's recommendation is instead focused on non-employees—individuals who receive commuted pension from an approved fund but are not employees of the organization responsible for setting up or funding the pension scheme. These could include dependents, nominees of deceased pensioners, or beneficiaries under a group insurance-linked pension plan who are not themselves in a contract of employment with the employer. In such cases, the pension income is currently taxed fully under the head 'Income from other sources' because there is no provision analogous to Section 10(10A) for them.' Which type of individual pensioners can benefit from this proposed amendment in tax treatment of commuted pension? According to Chartered Accountant Namrata Dedhia, 'This recommendation of the committee will benefit self-employed persons contributing to private pension funds and legal heirs of employees, where the pension is commuted, allowing exemptions similar to those available to employees.'Dedhia adds: 'Even if employed individuals contribute to private pension funds outside of their employment, the same would be taxable under the head "Income from Other Sources" and will be eligible for exemption, if commuted.' What are the different types of pension schemes that qualify as eligible pension schemes under the Income Tax Act? Sharma explains: 'Under the Income Tax Act, 1961, certain pension schemes are considered 'eligible' for the purpose of availing tax exemptions on commuted pension amounts under Section 10(10A).' According to Sharma, the three broad categories of pension are: Government: Pensions received by employees of the Central or State Government are fully exempt from tax when commuted, as per Section 10(10A)(i). This includes civil service retirees, armed forces personnel, and those directly employed under statutory departments or ministries. Since these employees serve the government directly, they receive full exemption without any limit on the quantum of the commuted pension. Pensions received by employees of the Central or State Government are fully exempt from tax when commuted, as per Section 10(10A)(i). This includes civil service retirees, armed forces personnel, and those directly employed under statutory departments or ministries. Since these employees serve the government directly, they receive full exemption without any limit on the quantum of the commuted pension. Private: For non-government employees, including those from the private sector, the exemption applies only if the pension is received from a recognized superannuation fund. These are employer-managed funds approved by the Commissioner of Income Tax under the Income Tax Rules, typically funded during an employee's tenure. As per Section 10(10A)(ii), if gratuity is also received, only one-third of the commuted pension is exempt; if gratuity is not received, one-half of the commuted amount is exempt. For non-government employees, including those from the private sector, the exemption applies only if the pension is received from a recognized superannuation fund. These are employer-managed funds approved by the Commissioner of Income Tax under the Income Tax Rules, typically funded during an employee's tenure. As per Section 10(10A)(ii), if gratuity is also received, only one-third of the commuted pension is exempt; if gratuity is not received, one-half of the commuted amount is exempt. Third-party self purchased pension: Under Section 10(10A)(iii), employees receiving pension from an approved pension fund set up by a life insurer (such as LIC or other registered insurers offering group pension schemes) are also eligible for exemption on the commuted portion, subject to specific conditions and approvals granted to the fund under the Income Tax Rules. Sharma explains that the National Pension System (NPS) is now widely recognized and specifically addressed in Sections 10(12A) and 10(12B), although it has a distinct treatment framework. He adds: 'While NPS is not directly covered under Section 10(10A), certain components such as lump-sum withdrawals do qualify for exemption.' Is there any other pension scheme apart from superannuation fund and NPS that a private sector employer can offer to its employees? According to Sharma, private sector employers have several options besides NPS and recognized superannuation funds to structure retirement and pension benefits for their employees, depending on their financial strategy and compliance explains: One commonly used retirement benefit is the Employees' Provident Fund (EPF), which is statutorily governed and includes a pension component known as the Employees' Pension Scheme (EPS). While the EPF itself serves as a lump sum savings corpus, the EPS provides monthly pension payments post-retirement, albeit in modest amounts. Employers may also opt for group annuity plans offered by life insurers such as LIC, ICICI Prudential, or HDFC Life. These can be structured as Defined Benefit Plans where the employer pays a bulk premium or annual contributions, and the insurer commits to paying a fixed or variable pension upon the employee's retirement. If the underlying fund is approved by the Income Tax Department, then the commutation of pension received under such schemes can be eligible for tax exemption under Section 10(10A)(iii). S. Sriram, Executive Partner, Lakshmikumaran & Sridharan Attorneys, agrees with Sharma and adds: 'A private sector employer can offer a private pension scheme to its employees. Private Pension programmes can be offered by non-employers also – for example, LIC can offer a pension scheme to its agents (who are not its employees), a hospital can offer a pension scheme to its non-employee visiting doctors, etc.. But taxability/ exemption on pension from such private plans would be subject to approval of the Scheme by the Income-tax Authorities.'Akhil Chandna, Partner & Global People Solutions Leader, Grant Thornton Bharat, agrees with Sriram and Sharma and adds: 'Apart from NPS and superannuation funds, private employers can also opt for corporate annuity plans and group retirement solutions offered by insurers. Additionally, employee pension schemes can also be managed through private trusts maintained by employers.' Pension given to PSU company employees falls under which category—government or others? Sharma explains: Employees of Public Sector Undertakings (PSUs), despite being part of government-owned companies, are not treated as government employees for the purposes of tax exemption under Section 10(10A)(i). This section is restricted to individuals who are directly employed by the Central Government, State Governments, or civil services. PSU employees, such as those working with BHEL, NTPC, ONGC, or LIC, are employed by corporate entities established under the Companies Act or through statutory bodies, and thus are categorized as 'other employees' under the Income Tax Act. Consequently, their commuted pensions fall under Section 10(10A)(ii). Can non-employees mean a private company employee whose employer does not have a pension fund, but that employee invested in an approved pension fund? Surana explains: Such individuals may not be classified as "employees" in relation to a pension-paying entity, but their pension receipts arise from self-funded or individually contracted pension schemes. As such, they fall outside the scope of Clause 19 and are instead covered under the general deduction mechanism introduced in Clause 93(1)(g). N.R. 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