If you file Income Tax Return (ITR) only for TDS refund, while your income is below the taxable limit, then there is good news for you. The Select Committee of the Lok Sabha has suggested a major change in the draft of the Income Tax Bill 2025, which can provide relief to lakhs of small taxpayers from unnecessary hassles.
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What is the matter- As per the current rules, if your income does not come under the tax bracket but TDS has been deducted from the bank or job, then it is necessary for you to file ITR to get a refund.
If you do not file ITR on time, then there is a risk of penalty or prosecution – even if you do not have any tax liability.
What will be the effect-
This provision has the greatest impact on people whose income is limited, such as:
Senior citizens
People living on pension
Temporary/contract employees
Small investors from whose FDs TDS is deducted
Most of these people do not come under the tax bracket, but still they are forced to file returns just for the refund.
What the committee says-
The Lok Sabha Select Committee has recommended the removal of sub-clause (1)(ix) of Section 263, which makes filing of ITR mandatory for refund.
The committee report says that forcing people with low income to file ITR only for refund is an undue burden. Failure to do so also creates a fear of punishment – which is wrong in practice.
What will change if the recommendation is accepted?
People whose income is less than the basic exemption limit will not be required to file ITR for refund. There will be no fear of penalty or legal action. Simplicity and justice will increase in the system.
What does it mean for taxpayers- If you file ITR every year only for refund, then now this compulsion can end. This will provide great relief to the elderly and people with limited income. The tax system will become more taxpayer-friendly.
What happened in Parliament
Bill introduced: 13 February 2025
Sent to committee: Same day
Report presented: 21 July 2025 (Select Committee Chairperson Baijayant Panda)
Members in the committee: 31 Lok Sabha MPs
Overall- If your income is less than the tax and you file returns only for refund, then the upcoming law can give you freedom from this hassle. This change is being considered a big step towards a simple tax system and respect for honest taxpayers.
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