In a landmark move, the Indian government has introduced the revised Income Tax Bill, 2025, aiming to modernize India’s archaic tax framework. With Parliament’s meticulous input, the revamped bill promises simplicity, equity, and clarity, signaling a transformative moment in direct taxation.
Why the Revision Was Needed
- The original Bill, introduced on February 13, 2025, sought to replace the 1961 Act but was withdrawn on August 8 to consolidate revisions and avoid confusion.
- A revamped version, incorporating 285 recommendations from the Select Committee chaired by MP Baijayant Jay Panda, was tabled and passed in the Lok Sabha on August 11.
Parliamentary Affairs Minister Kiren Rijiju reassured stakeholders that the bill maintains its core vision while embracing constructive amendments
Key Highlights of the Revised Bill
Simplified Rebates & Thresholds
- Section 87A rebate threshold raised from ₹7 lakh to ₹12 lakh; max rebate increases from ₹25,000 to ₹60,000. Marginal relief continues for those slightly above the ceiling.
- Deduction structure refined: 100% rebate or ₹60,000—whichever is less—and marginal relief mechanisms apply beyond ₹12 lakh in income (upstox).
Aligning With Citizens’ Needs
- Honest mistakes by taxpayers are likely to avoid penalties, encouraging compliance and reducing penal strain.
- Full tax deduction now available on commuted pension from approved funds (e.g., LIC Pension Fund, NPS).
- Clarity on house property taxation: 30% standard deduction on annual value reinstated; pre-construction interest can be claimed in five installments after completion.
Pension Planning Incentives
- The newly passed Taxation Laws (Amendment) Bill, 2025, grants tax exemptions to subscribers of the Unified Pension Scheme, promoting retirement security.
Streamlined Compliance & Digital Focus
- Implements streamlined assessment procedures, digital integration, and faceless processing, optimizing transparency and efficiency.
The Road Ahead
The revised Income Tax Bill, 2025, passed in Lok Sabha, marks a significant stride toward simplifying India’s tax regime. By aligning legislative vision with practical realities, it promises broader compliance, fairness, and clarity—bringing long-overdue reform to millions of taxpayers.
Stay tuned as the bill navigates the Rajya Sabha and eventual enactment. It’s a new era for Indian taxation—with simplicity and inclusivity at its core.
Disclaimer:
This blog post has been created using information gathered from reliable news sources, government releases, and parliamentary records. While every effort has been made to ensure accuracy, readers are advised to refer to official notifications and consult qualified professionals before making financial or tax-related decisions.
Previous Blog: Is ICICI Bank’s ₹50,000 Minimum Balance Rule the End of Affordable Banking?
