FM Sitharaman to Present New Income Tax Bill in Lok Sabha Today: Key Expectations

FM Sitharaman to Present New Income Tax Bill in Lok Sabha Today: Union Finance Minister Nirmala Sitharaman will introduce the revised Income-tax Bill, 2025 in the Lok Sabha today replacing the original draft tabled on February 13, 2025.

The earlier version was withdrawn and was criticized for the time and effort spent on it. The government however says it is for legislative clarity and efficiency.

The Finance Minister said withdrawal was necessary as several technical corrections including drafting refinements, alignment of phrases and proper cross-referencing were to be done to ensure legislative clarity and coherence.

The government also cited the number of suggestions made by the Select Committee of Parliament, chaired by Baijayant Panda as a reason for this move.

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Responding to the criticism, Minister of Parliamentary Affairs Kiren Rijiju explained the logic behind the move. “On criticisms of withdrawing the new bill and ignoring the earlier one, for which a lot of work was done, and all the work and time spent will go down — that is not the case,” he said.

Rijiju said when a parliamentary committee submits a report with several proposed amendments and many of them are accepted by the government, the standard practice is to withdraw the original bill and introduce a revised version. “This makes it easier for Parliament to consider and pass the Bill in its updated form,” he added.

He further explained the procedural complexity: “To incorporate each amendment, three separate motions have to be moved. While this is manageable for a small number of changes, it’s impractical when over 285 changes, including 32 major ones, are recommended. Hence, withdrawing and reintroducing the Bill saves time and ensures procedural efficiency.”

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The new draft will have most of the committee’s recommendations. Key provisions are:

• Anonymous donations will be allowed only to purely religious trusts and not to those engaged in social services.
• Taxpayers can claim TDS refunds after ITR deadline without penalties.
• Tax authorities will have to issue notices and consider responses before taking action.

The Bill also proposes a modern, digital-first, faceless assessment system to simplify compliance and curb corruption and replace the complex legal language of 1961 Act with simpler and clearer language.

If passed the legislation will replace the 63 year old Income-tax Act with a streamlined, litigation free direct tax code – a reform the government calls one of the biggest in recent times.

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