Representative image for Income Tax.
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The Taxation Law (Amendment) Bill, 2025 seeks to amend the Finance Act, 2025 and the Income Tax Act, 1961.
Through the Income Tax (No. 2) Bill, 2025 the government seeks to overhaul the direct tax legislation in the country. The new bill seeks to simplify the tax law by reducing the number of sections to 536 from the current over 800 sections in the Income Tax Act, 1961.
The amendments made by Taxation Laws (Amendment) Bill, 2025 have also been made part of the new Income Tax Bill.
The bill was first introduced in Lok Sabha on February 13 during the budget session. On the same day it was referred to a Select Committee of the Lok Sabha for examination.
The 31-member panel, chaired by BJP MP Baijayant Panda, submitted its report on July 21. Over 4500-page report outlined around 285 recommendations. One of the most notable suggestions by the Lok Sabha panel is the introduction of greater flexibility for tax refunds, even in cases where returns are filed after the due date.
“Almost all of the recommendations of the Select Committee have been accepted by the government. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately,” the statement of objects and reasons of the new Bill noted.
“The original draft raised concerns about ambiguities, particularly regarding house property taxation, pension deductions, and the refund process for delayed filings. These issues risked increased litigation, compliance complexity, and taxpayer uncertainty. The revised bill addresses these gaps to simplify interpretation, reduce disputes, and promote fairness,” said Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co.