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The Income Tax Bill of 2025, which was presented in the Lok Sabha on February 13 to take the place of the current Income Tax Act from 1961, has been officially withdrawn. A revised version of the Income Tax Bill, which includes many suggestions from the Select Committee led by BJP MP Baijayant Jay Panda, will be presented in Parliament on Monday. To prevent confusion caused by having multiple versions of the Bill and to offer a clear and updated version that includes all changes, the new version of the Income Tax Bill will be put forward for the House to consider. Mr. Panda, who led the Parliamentary Select Committee that reviewed the bill, mentioned that once this new law is approved, it will make India’s long-standing tax system simpler, reduce legal complexities, and help individual taxpayers as well as small and medium enterprises avoid unnecessary lawsuits.
"The current Income Tax Act from 1961 has been changed over 4,000 times and is over 5 lakh words long. It has become very complicated. The new bill cuts this complexity by about half—making it much easier for regular taxpayers to understand," Mr. Panda stated. He added that the primary beneficiaries of this simplification will be small business owners and small and medium enterprises who often do not have the legal or financial knowledge to deal with complicated tax systems. The new rules will significantly contribute to building a fair and just direct taxation system that does not place extra direct tax burdens on the working and middle-class people in the country. Tax brackets and rates have been adjusted to help all taxpayers. The new system greatly lowers taxes for the middle class, leaving them with more disposable income, which in turn encourages household spending, saving, and investing, as noted by the government.
The Finance Act of 2025 has raised the income limit for getting a tax rebate under section 87A of the Income Tax Act of 1961 for resident individuals taxed under the new tax system of section 115 BAC, from Rs 7 lakh to Rs 12 lakh. Also, the maximum rebate has been increased from Rs 25,000 to Rs 60,000. The marginal relief previously available under the new tax regime will still apply for incomes slightly above Rs 12 lakh, according to the Finance Ministry. The new income tax bill is expected to make it simpler for regular citizens and small businesses to file their taxes.
