Income Tax: The Income Tax Bill, 2025 is going to replace the Income Tax Act currently in force. The new law is expected to come into force from April 1, 2026. Let us know what major changes can be made under this law.
Income Tax Act 2025: The monsoon session of Parliament will begin after two days. It will start from July 21 and run till August 12. During this time many new bills are expected to be introduced. Before the start of the monsoon session, the most awaited thing is about the new Income Tax Bill 2025. The special committee of the Lok Sabha, which examined this bill, has given 285 suggestions regarding this. Information related to this is coming in media reports. The committee will present its report in the Lok Sabha on July 21. Some of the changes suggested by the committee are as follows.
What were the suggestions given by the committee?
- The committee has suggested changing the rule in which refund is not given if income tax return (ITR) is filed after the due date. The new bill has a rule that to get a refund, a person has to file his income tax return within the due date. Section 433 of the new Income Tax Act also says that refund can be sought only when the return is being filed.
- The deduction available under section 80M was not included in the new Income Tax Act. This deduction is for such companies which take advantage of the special rate under section 115BAA and give inter corporate dividend. Therefore, the committee has proposed to include it again in the bill. Among the changes suggested by the committee is the reinstatement of the repealed section 80M. This step will promote efficient corporate tax structure and reduce the tax burden on companies.
- The committee has suggested that now taxpayers can also get zero TDS certificate. In the current bill, taxpayers were only getting a certificate of low TDS deduction. The Income Tax Act, 1961 was implemented from 1 April 1962. It has been amended 65 times so far and more than 4,000 changes have been made.
What will be in the new Income Tax Act?
The main objective of the new Income Tax Act is to make it simple and easy to understand and clear. This bill uses simple language, short sentences and active phrases. It will remove repetition and difficult worded explanations. The new bill has 2.6 lakh words and 536 sections, while the number of chapters has been reduced to 23. Its purpose is to resolve legal issues arising from interpretations made by different courts. This bill also avoids cross-referencing, which means that there will be no need to look at many provisions again and again to understand one thing.
Who will be affected by these changes?
Taxpayers will get the most relief from these changes. Changes in the rules related to refund will benefit those people who could not file ITR on time due to some reason. Apart from this, companies will also benefit from this. Restoring deduction on dividend will make capital operations easier in the corporate sector. By removing the loopholes in the existing law in section 536, a clear and uniform law has been made, which is expected to increase transparency.
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