Latest news with #ParliamentarySelectCommittee
Time of India
15 hours ago
- Business
- Time of India
Income Tax Bill, 2025 withdrawn: Why govt pulled back original proposal & what are Parl panel's suggestions
The government on Friday formally withdrew the Income-Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 this year to replace the existing Income-Tax Act, 1961. A revised draft, incorporating most of the 285 suggestions made by the Parliamentary Select Committee chaired by BJP MP Baijayant Panda , will be introduced on Monday, August 11. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Why the earlier proposed Bill was withdrawn The Income-Tax Bill, 2025 was envisioned to simplify and modernise India's tax framework, replacing the over six-decade-old law. It proposed a streamlined structure, changes to tax slabs, digital tax provisions , dispute resolution mechanisms, and efforts to widen the tax base using data and tech tools. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Neurologists: These Shoes Are the Best Thing You Can Do for Your Body After 60 Barefoot Vitality Undo However, the draft drew feedback from the parliamentary committee prompting certain changes. Also Read: Government withdraws Income-Tax Bill, 2025; updated version to be tabled on Monday Live Events As per officials, the withdrawal aims to prevent confusion arising from multiple versions and to present a consolidated draft with all accepted amendments. What the committee recommended The 31-member Parliamentary Select Committee submitted a detailed 4,575-page report last month, recommending both minor corrections and 32 major changes. The key changes suggested include: The panel has proposed a change in the definition of "beneficial owner" to allow individuals who derive direct or indirect benefit from shares during the tax year to carry forward losses. Recommendations include restoring the deduction for inter-corporate dividends, which was missing in the original draft. A standard 30% deduction is also proposed, to be applied after subtracting municipal taxes, and pre-construction interest deductions could now be extended to let-out properties. To ease the compliance burden for individual taxpayers, the report suggests: Issuing 'Nil' tax deduction certificates Allowing discretionary waiver of penalties for non-deliberate non-compliance Enabling refunds in late ITR filings for small taxpayers The panel has also sought more clarity on the definition of non-performing assets (NPAs) to reduce long-standing disputes in tax and banking interpretations. Clarity for corporates and charitable trusts The report has proposed clearer definitions of 'parent company' and sought proper provisions for non-profits and religious-cum-charitable trusts. The committee recommends that anonymous donations should not disqualify them from tax exemptions. It also called for the removal of residual references to the Income-Tax Act, 1961, to ensure the new code is self-contained and litigation-resistant.
Indian Express
25-07-2025
- Business
- Indian Express
The Income Tax Bill does not award arbitrary power to the state by allowing digital search and seizure. Here's why
On July 21, the Parliamentary Select Committee tabled in Parliament its report on the Income Tax Bill, 2025, aimed at simplifying and reforming the country's primary legislation on income tax. The Bill was introduced in the Lower House of Parliament in February this year, and the Select Committee was tasked to sift through the text of the Bill, clause by clause, to ensure that its objects and purposes are clearly and adequately spelt out. Importantly, the Committee has retained — and rightly so — the controversial provisions dealing with powers and procedures relating to digital search and seizure. The digital search and seizure powers are contained in Clause 247 of the Bill, which empowers the tax authority to enter and search any place where an electronic media or computer system (used to store relevant information or evidence) is suspected to have been kept. Clause 261(e) seeks to define 'computer system' to include virtual digital space, that is, personal and professional communications platforms and social media accounts, among other things. The power of the tax authority to enter and search a taxpayer's digital space has been criticised on the ground that wide search and seizure powers arbitrarily infringe upon the taxpayer's fundamental right to privacy guaranteed under Article 21 of the Indian Constitution. The Income Tax Act, as it currently stands, was introduced in 1961, and came into force in 1962. Section 132 of the 1961 Act — which corresponds to Clause 247 of the Bill — has always vested wide search and seizure powers in the tax authority. The Finance Act, 2001 inserted Section 2(12A) into the Act to extend legal recognition to books of account maintained on computers, and Section 2(22AA) was inserted to include 'electronic record' within the meaning of the word 'document' defined under the Act. Subsequently, the Finance Act, 2002 inserted Section 132(1)(iib) facilitating access to electronic devices. Finally, Section 275B made it a punishable offence to refuse cooperation with the tax authority in this regard. The power to conduct digital search and seizure, therefore, has always been available with the tax authority. In defining the term 'virtual digital space', the new Bill simply makes explicit what was already implicit in the law. Not only that, search and seizure powers have survived judicial review and scrutiny of the Supreme Court. In 1973, the constitutionality of Section 132 of the 1961 Act was unsuccessfully challenged before a five-judge Bench of the Supreme Court in Pooran Mal vs Director of Inspection. There, the Court categorically held that the tax authority must possess the power to conduct search and seizure to combat tax evasion. There is no reason why the underlying legal reasoning should not extend to digital search and seizure. Of course, our jurisprudential understanding of the right to privacy has since changed, especially after 2017, when a nine-judge bench of the Supreme Court in K Puttaswamy vs Union of India recognised the right to privacy as part of the fundamental right to life and liberty under Article 21 of the Indian Constitution. The right to privacy, however, is not absolute and, even if we were to apply Puttaswamy principles, search and seizure powers would still survive the scrutiny of our constitutional courts. Importantly, Clause 247 of the Bill (much like Section 132 of the 1961 Act) has sufficient safeguards in place and satisfies the Puttaswamy test of proportionality. For instance, the law requires the tax authority to record reasons before initiating a search and seizure action, and sanction must be obtained from, and granted by, the appropriate authority. Moreover, the powers so exercised would be subject to judicial review and a constitutional court may call upon the tax authority to disclose the reasons behind the search and seizure operation and may even examine the circumstances based on which sanction was obtained and granted. In fact, in a recent decision in the case of Principal Director of Income Tax vs Laljibhai Kanjibhai Mandalia (2022), the Supreme Court applied the Wednesbury principle to allow for search powers by deferring to the wisdom of the tax authority. In the past decade, Parliament has incorporated several changes in the tax law to keep pace with the digital transformation of the society. For instance, the concept of significant economic presence was incorporated in the income tax law to tax business profits of foreign companies deriving income without having any physical presence in India. Likewise, a digital services tax was enacted (now withdrawn) to tax revenues generated from digital services offered in India by foreign digital platforms. India is also actively participating in the Pillar One tax project spearheaded by the OECD to address tax challenges posed by digitalisation. Digital search and seizure powers contained in the Bill, which facilitate recovery of incriminating digital data, have a similar objective. The writer is an advocate in the Bombay High Court. Views are personal
Hans India
22-07-2025
- Business
- Hans India
New income tax bill to simplify tax filing for commoners, small businesses: Jay Panda
New Delhi: The new income tax bill will make filing taxes easier for common citizens and small businesses, said BJP MP Baijayant Jay Panda, who chaired the Parliamentary Select Committee responsible for reviewing the legislation. Speaking to IANS, he emphasised that the new law, once passed, will simplify India's decades-old tax structure, cut down legal confusion, and help individual taxpayers and MSMEs avoid unnecessary litigation. "The current Income Tax Act of 1961 has undergone more than 4,000 amendments and contains over 5 lakh words. It has become too complex. The new bill simplifies that by nearly 50 per cent -- making it far easier for ordinary taxpayers to read and understand," Panda told IANS. He highlighted that the greatest beneficiaries of this simplification would be small business owners and MSMEs who often lack the legal and financial expertise to navigate complicated tax structures. 'Unlike large corporations that have access to tax consultants and legal advisors, MSMEs and common taxpayers struggle. A simpler law means fewer disputes and easier compliance,' he said. The Select Committee, under Panda's leadership, held 36 uninterrupted meetings over several months. It consulted more than a hundred stakeholders, including industry bodies and individual experts. Panda noted with pride that not a single meeting was postponed and no extension was sought, making this committee a rare example of efficient parliamentary functioning. The report, which includes over 300 recommendations, has been submitted well within schedule and is expected to be tabled during the current Monsoon Session. 'If passed, the new law could take effect from April 1 next year,' he added. Panda credited this success to bipartisan cooperation. "There was no political point-scoring. Every member focused on simplifying the tax law for the benefit of taxpayers. It was truly a team effort in the national interest," he told IANS. 'While the bill itself does not change tax policies -- which remain the domain of the Finance Bill and the Union Budget -- it lays a modern, simplified foundation that allows existing and future tax policies to be implemented more clearly and effectively,' he added. Panda also clarified that the committee did not propose any policy changes but ensured the legal structure accommodates all recent reforms and is accessible to every citizen. "Simplifying the law itself helps policy implementation and reduces confusion for both taxpayers and tax administrators," he said.
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Business Standard
22-07-2025
- Business
- Business Standard
New Tax Bill may allow late ITR refunds, protect NGO income from heavy tax
In a key move that could impact millions of taxpayers and not-for-profit organisations (NPOs), a Parliamentary Select Committee led by BJP MP Baijayant Panda has recommended critical changes to the draft Income Tax Bill, 2025, which seeks to replace the six-decade-old Income Tax Act, 1961. The panel's 4,575-page report, tabled in the Lok Sabha on Monday, focuses on simplifying the tax code while safeguarding key exemptions for religious-charitable institutions and easing compliance for small taxpayers. Relief for Religious-cum-Charitable Trusts One of the most significant recommendations is to retain the existing tax exemption on anonymous donations made to religious-cum-charitable trusts. Clause 337 of the new Bill had proposed a flat 30% tax on all anonymous donations, except for those made to purely religious trusts. This marked a sharp departure from current law, under which religious and charitable trusts receive broader exemptions unless the donations are specifically earmarked for hospitals or educational institutions they run. The Committee flagged this as a "critical omission" and urged the reintroduction of a provision similar to Section 115BBC of the current Act to prevent adverse consequences for religious-charitable trusts. 'The proposed clause could significantly disrupt the NPO ecosystem,' the report warned. Tax Only 'Income', Not 'Receipts' Another major concern addressed is the proposed shift from taxing 'income' to 'receipts' of NPOs. The Committee strongly opposed this move, arguing it goes against the principle of real income taxation. Taxing gross receipts would unfairly include capital recoveries and inflows that do not represent actual earnings, it said. Instead, the Committee recommended a return to net income-based taxation, urging a rewrite of Clause 335 to ensure only surplus income is taxed, not donations or reimbursements. TDS Refunds Without ITR Filing In a taxpayer-friendly move, the Committee also proposed allowing TDS refunds without mandatory ITR filing. The current draft Bill requires individuals to file a return within the due date to claim a TDS refund — even if their total income is below the taxable limit.'This may inadvertently criminalise small taxpayers who are otherwise non-filers,' the report cautioned. The Committee has therefore suggested removal of Sub-clause (1)(ix) from Clause 263, which mandates return filing for refund claims. Shift to 'Tax Year' Welcomed The Committee has also welcomed the government's decision to replace the concepts of 'previous year' and 'assessment year' with a unified 'tax year'. This move is expected to streamline tax references, reduce confusion, and improve accessibility of the law to non-specialists. Additional Recommendations According to experts, the Committee has made over 566 suggestions aimed at refining the draft Bill. These include: Modernising definitions such as "capital asset" and "infrastructure capital company" Clarifying property-related deductions Re-emphasising the "actual payment" rule for claiming business expense deductions Making penalties for non-maintenance of books discretionary Creating procedural safeguards to prevent excessive penalisation of honest taxpayers Nangia Andersen LLP, M&A Tax Partner, Sandeep Jhunjhunwala said the Committee has suggested modernising definitions such as "capital asset" and "infrastructure capital company", clarifying property-related deductions, and reinforcing the "actual payment" rule for business expenses. It has also recommended procedural safeguards such as making penalties for non-maintenance of books discretionary and permitting refund claims even where returns are not filed on time. According to Amit Baid, Head of tax at BTG Advaya: 1) Reintroducing Nil withholding certificates helps prevent refund backlogs for genuine zero-tax cases — including non-residents entitled to treaty relief on cross-border transactions. (2) Disallowing all deductions just because a return was late would have punished lakhs of genuine taxpayers. The Committee's fix restores sanity by limiting this to only certain income-linked deductions. (3) Without the phrase 'in the circumstances of the case', GAAR could have become a tax sledgehammer - treating even bona fide restructurings as abuse. The Committee's intervention restores balance and guards against overreach on honest transactions. (4) Many legacy trusts were staring at disqualification under vague definitions. By recommending clarity on 'wholly for charitable or religious purpose', the Committee saves hundreds of older institutions from legal limbo. Chance missed The Committee missed the chance to resolve the double taxation risk in holding company structures. Denying inter-corporate dividend deduction under the 22% concessional regime not only breaks with past policy logic, but could make this regime unattractive for investment vehicles and cross-border structures. Tax-neutral treatment for fast-track demergers could be challenging. By not addressing this, the Committee has left a key gap that may discourage intra-group restructurings." As the Monsoon Session of Parliament begins on July 21, the debate on the Committee's recommendations will shape the final contours of the Income Tax Bill, 2025, before it replaces one of India's longest-standing laws. "The report provides clause by clause evaluation of the Bill with total 566 observations / recommendations for change. This is a mammoth task performed in a record time with precise and relevant recommendations. Now the Lok Sabha has to debate the recommendations and identify the changes that are required in the current Bill to make it futuristic and relevant for common tax-payers. It is highly desirable to defunct the old law and bring a new law which is transparent, easy to comprehend, in line with current business requirements and help to reduce tax disputes," said Preeti Sharma, Partner, Tax and Regulatory Services, BDO India.
Time of India
21-07-2025
- Business
- Time of India
Parliamentary panel suggestions on Income Tax Bill 2025 tabled in Lok Sabha
New Delhi: The Parliamentary Select Committee appointed to review the new Income Tax Bill 2025 has proposed to change the definition of "beneficial owner" to allow carry forward losses as individuals who derive benefits directly or indirectly from shares during the tax year. The 31-member Select Committee, chaired by BJP leader Baijayant Panda , has made 285 suggestions to the draft Income tax bill 2025 in a 4,575 page report tabled in Lok Sabha Monday. Explore courses from Top Institutes in Select a Course Category Healthcare Public Policy Data Science Degree Artificial Intelligence healthcare Others Operations Management Management Finance Data Analytics Project Management Leadership Design Thinking others Product Management Cybersecurity MBA Technology CXO Digital Marketing MCA PGDM Data Science Skills you'll gain: Financial Analysis in Healthcare Financial Management & Investing Strategic Management in Healthcare Process Design & Analysis Duration: 12 Weeks Indian School of Business Certificate Program in Healthcare Management Starts on Jun 13, 2024 Get Details While most of the recommendation are aimed for greater clarity, there were 32 major recommendations including reinstating the deduction in respect of inter-corporate dividends absent in the original draft, a standard 30% deduction to be calculated post-deduction of municipal taxes and extending pre-construction interest deductions to even let-out properties. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 20 Pieces of Clothing Older Women should Avoid Learn More To ease the pain points for common taxpayers the report also recommends allowing for 'Nil' tax deduction certificates, and more discretion for officers to waive penalties when non-compliance is not deliberate and allow refunds in case of late filings of tax returns for small taxpayers. The committee has also called for more clarity on the definition of non-performing assets, intending to resolve the long-standing dispute over the definition of NPA under banking and tax laws. The panel wants the term 'parent company' clearly defined, and asked the department to fix gaps in clauses covering capital gains and sought proper provisions for non-profit organisations, highlighting that religious-cum-charitable trusts should not lose exemptions for anonymous donations. The committee calls for eliminating any residual references to the 1961 Act to make the new code self-contained and litigation-resistant. Live Events "Collectively, these recommendations underscore the committee's focus on promoting taxpayer protection, enhancing fairness, and reducing compliance burdens," said Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm. If enacted, these provisions are expected to strengthen transparency, minimize disputes, and further the government's ambition of creating a contemporary, efficient, and user-friendly tax regime." Experts said the report will add more clarity to the new bill left out in the original draft. "Importantly, the report addresses concerns of charitable and not-for-profit entities by advocating clearer definitions, replacing "receipts" with "income" for tax purposes, and restoring the concept of "deemed application", urges inclusion of professionals under electronic payment norms, prescribes qualifications for valuers, and recommends contextual fairness in GAAR provisions," Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, said.
