FM Nirmala withdraws Income Tax Bill, 2025 from Lok Sabha

New Delhi: The central government on Friday withdrew the Income Tax Bill, 2025 from the Lok Sabha, which was introduced in the lower house of Parliament on February 13 to replace the over six-decade old Act governing the direct tax system in the country.

Finance Minister Nirmala Sitharaman moved the proposal to withdraw the bill in Lok Sabha amid uproar by opposition party members over Bihar SIR revisions and allegations of ‘vote chori’.

According to sources, the revised version of the Bill, incorporating most of the changes suggested by BJP MP Baijayant Panda-led Select Committee of Lok Sabha, is expected to be introduced in Parliament on August 11.

“To avoid confusion by multiple versions of the Bill and to provide a clear and updated version with all changes incorporated, the new version of the Income Tax Bill will be introduced for the consideration of the House on Monday,” a source said.

The Bill was introduced in the Lok Sabha on February 13 during the budget session. On the same day it was referred to the Select Committee for examination.

The 31-member Select Committee chaired by Kendrapara MP Panda submitted its report in the Lok Sabha on July 21.

“Almost all of the recommendations of the Select Committee have been accepted by the Government. Suggestions have also been received from other sources which are required to be incorporated to convey the correct legislative meaning,” the Finance Minister said.

The revised version is expected to preserve the core structure of the Bill, which was introduced during the Budget Session. However, it will include several technical and procedural changes suggested by the Select Committee and other stakeholders.

“There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing,” Sitharaman said.

Major changes suggested by the Select Committee include allowing taxpayers to claim TDS refunds even after the ITR filing due date without paying any penal charges and continuation of tax exemption on anonymous donations made to religious-cum-charitable trusts.

In the Bill tabled in February, the government had proposed to exempt non-profit organisations (NPOs) from taxing anonymous donations received by purely religious trusts. However, such donations received by a religious trust that may also have other charitable functions, like running hospitals and educational institutions, were proposed to be taxed.

In the revised version of the Bill the ambiguity with regards to pure religious and mixed charitable trusts is likely to be removed.