New Delhi | August 8, 2025 ।Sky Link Times
The Union Government has formally withdrawn the Income Tax Bill 2025, which was introduced in the Lok Sabha on February 13 to replace the six-decade-old Income Tax Act, 1961. A revised version, incorporating key recommendations from the Select Committee led by BJP MP Baijayant Jay Panda, will be introduced in Parliament on Monday.
The move aims to avoid confusion caused by multiple versions of the Bill and present a consolidated, updated draft with all suggested changes included.
“The new law will simplify India’s decades-old tax structure, reduce legal ambiguity, and help taxpayers—especially individuals and MSMEs—avoid unnecessary litigation,” said Mr. Panda.
Why the Change?
The existing Income Tax Act, 1961 has undergone over 4,000 amendments and now spans more than 5 lakh words, making it highly complex.
The new Income Tax Bill 2025 will reduce complexity by nearly 50%, making it easier for ordinary taxpayers to understand.
Small business owners and MSMEs are expected to benefit the most from simplified compliance.
Key Highlights of the New Income Tax Bill
No extra direct tax burden on working and middle-class taxpayers.
Revised slabs and rates to benefit all taxpayers, especially the middle class.
Section 87A rebate limit (for residents under the new tax regime) raised from ₹7 lakh to ₹12 lakh.
Maximum rebate amount increased from ₹25,000 to ₹60,000.
Marginal relief available for incomes slightly above ₹12 lakh.
Expected to boost consumption, savings, and investment by leaving more disposable income in citizens’ hands.
Impact on Taxpayers
The Finance Ministry says the overhaul will make tax filing faster and easier for individuals and small businesses, ensuring a fair and equitable direct taxation system.
Once passed, the Bill will mark one of the most significant reforms in India’s direct taxation framework in decades.
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