According to the new version of the Income Tax Bill, 2025, refund will be available even if Income Tax Return (ITR) is filed late

The new version of the Income Tax Bill, 2025 was passed in the Lok Sabha on August 11. The new version includes two such provisions, which will greatly benefit taxpayers. In fact, after studying the first version of the bill, the Parliamentary Committee had advised the government to make 285 amendments in it. It is said that keeping in mind the interest of taxpayers, the government has accepted most of the recommendations.

New income tax rules will be implemented from April 1 next year

The 31-member parliamentary committee headed by BJP MP Baijayant Panda submitted its recommendations to the government on July 21. After this, the government introduced the new version of the Income Tax Bill, 2025 after amendment in the Lok Sabha on August 11. The new Income Tax Act is going to come into force from April 1, 2026.

Refund even if ITR is filed after the last date

According to the new version of the Income Tax Bill, 2025 , refund will be available even if Income Tax Return (ITR) is filed late. This means that even if a taxpayer files a return after the last date, he will get a refund. The first version of the Income Tax Bill, 2025 had a provision of not giving refund for filing returns late. Tax experts had objected to this. The government has amended this rule in the new version. This is a big change in the interest of taxpayers.

Amendment in rules in the new version of Income Tax Bill

We can understand this with an example. Suppose the last date for filing income tax return is 31st July (15th September this year). Even after this, filing of income tax return is allowed. This is called belated return. Penalty and interest on tax have to be paid for filing belated return. In the earlier version, there was a provision that taxpayers who filed return after the last date will not get refund.

The parliamentary committee had advised the government

The parliamentary committee headed by Baijayant Panda had recommended the government to delete sub-clause (1)(IX) of clause 263. Mayank Mohanka, founder and director, TaxAaram.com, said, “The government has accepted the parliamentary committee’s advice. This means that now the processing of refund is no longer linked to the filing of returns by the due date. Even belated and revised returns will entitle a taxpayer to a refund.”

There has also been a change in the rules for calculating standard deduction

Another important change is related to the calculation of standard deduction on house property. The parliamentary committee had advised to calculate the standard deduction after deducting the municipal tax. The government has accepted this advice. Now the standard deduction will be calculated after deducting the municipal tax from the property value. This can be understood with the help of an example.

Calculation will be done after deducting municipal tax

Suppose the value of a property is Rs 100 and Rs 5 municipal tax has been paid on it. In such a case, the calculation of standard deduction of 30 percent will not be done on Rs 100 but on Rs 95. This means that the standard deduction will be calculated after deducting the municipal tax from the property value. Mohanka said that with this change made in the new version, there will be no possibility of dispute regarding the calculation of standard deduction later.

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The new Income Tax Bill has been passed in the Lok Sabha. It was earlier withdrawn to incorporate certain recommendations of the Lok Sabha’s select panel. Another bill, the Taxation Laws (Amendment) Bill, was also passed in the Lok Sabha. The bill aims to provide tax exemption to subscribers of the Unified Pension Scheme. Both the bills were passed without any debate as the opposition continued to protest demanding discussion on various issues including SIR. The government has incorporated almost all the recommendations of the select committee in the new revised Income Tax Bill .

New income tax bill passed without discussion

Union Finance Minister Nirmala Sitharaman on Monday introduced the revised version of the new Income Tax Bill, 2025 in the Lok Sabha amid opposition uproar. It includes most of the recommendations from the Parliamentary Select Committee headed by BJP leader Baijayant Panda. This new bill is going to replace the old laws, Income Tax Act 1961. This bill has been approved by the Lok Sabha without discussion.

Nirmala Sitharaman told what is in the bill

While introducing the bill in the Lok Sabha, Finance Minister Sitharaman said that many suggestions were received, which were required to be incorporated to provide the correct legislative meaning. She said that improvements have been made in the nature of drafting, alignment of phrases, resulting changes and cross referencing. The earlier bill was withdrawn to avoid confusion. Now the new Income Tax Bill 2025 has been passed in the Lok Sabha.

The opposition raised questions on passing the bill without discussion

The opposition has raised questions on the passing of the new Income Tax Bill. Samajwadi Party chief and MP Akhilesh Yadav reacted to the new Income Tax Bill 2025. He said that such a big decision was taken without discussion in the House. Some new changes are going to be made in the Income Tax Bill. Everyone has seen the situation of demonetization, GST. Now America is also increasing tariffs. Business is dependent on China, we are seeing all this. Akhilesh Yadav further said that where are we taking the country? How will a developed India be created in Amrit Kaal, these are big questions.

285 suggestions included in the updated income tax bill

Earlier, while introducing the new Income Tax Bill in the Lok Sabha, Nirmala Sitharaman said that the revised bill will improve fairness and clarity. It will bring the law in line with the existing provisions. The new draft aims to provide MPs with a single, updated version, which reflects all the suggested changes. The updated Income Tax Bill 2025 incorporates 285 suggestions from the Parliamentary Select Committee.

Why was the new income tax bill introduced?

The new law aims to simplify tax processes and remove past loopholes, potentially transforming the income tax landscape in the country. Last week, the government formally withdrew the Income Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the existing Income Tax Act, 1961.

These are the big changes in the Revised Income Tax Bill

According to the government, the revised bill has made extensive changes in slabs and rates to benefit all taxpayers. The new structure will reduce taxes for the middle class and leave more money in their hands, which will boost domestic consumption, savings and investment.

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Linking of PAN and Aadhaar is mandatory

Under the new Income Tax Law, every person who has been allotted a PAN and who is eligible to obtain an Aadhaar number will have to intimate his Aadhaar number to the Income Tax Department.

• If a person does not do so, his PAN will become inactive.
• Inactive PAN cannot be used for activities like banking, financial transactions and tax filing.

Facility to use Aadhaar as an alternative to PAN

• Individuals who do not have PAN can use their Aadhaar number.
• Such persons will later be allotted a Permanent Account Number (PAN).
• Individuals who are already PAN holders can also use their Aadhaar in place of PAN, provided they have already intimated their Aadhaar number.

It is illegal to have more than one PAN

• Any person who already holds a PAN cannot obtain a second PAN.
• If a person holds two or more PAN cards, he may face heavy penalties or legal action.

Mandatory use of PAN or Aadhaar for financial transactions

• Any person has to furnish PAN or Aadhaar number while transacting with the Income Tax Department.
• PAN or Aadhaar will be required for opening bank accounts, depositing cash above Rs 50,000, purchasing real estate and other major financial activities.
• The concerned authority will have to ensure that the PAN or Aadhaar is authenticated correctly.

Financial penalty for not linking Aadhaar-PAN

If a person does not link PAN with Aadhaar within the stipulated time limit, he may have to pay a fine of up to Rs 1,000. Also, such PAN can be deactivated, which may cause problems to the taxpayer in financial activities.

Heavy penalty for giving wrong information

If a person furnishes a wrong Aadhaar or PAN number, a fine of Rs 10,000 can be imposed per violation. Apart from this, more stringent legal action can also be taken in case of tax evasion or fraud.

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Many unnecessary provisions like section 54E have been removed from the new Income Tax Bill. This is a section which provides information on the rules of how to save tax on capital gains from selling residential house property. Along with this, many old rules and exemptions have also been removed, which are no longer relevant.

In the new Income Tax Bill, the provisions related to TDS and Presumptive Taxation have been presented in a tabular format so that it becomes easier for taxpayers to understand them.

In the new bill, the provisions related to DRP have been made more clear so that they are easy to understand and also help in resolving disputes. This update in the Dispute Resolution Panel (DRP) will help in reducing litigation and will also help in resolving tax related disputes.

In the new bill, the concept of Tax Year was introduced in place of Assessment Year, which will start from April 1 and will run till March 31.

In the new bill, it has been said that other digital assets including cryptocurrency will now be kept in the property category. That is, now they will be considered as capital assets and tax will be levied on them.

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Finance Minister Nirmala Sitharaman has introduced the New Income Tax Bill 2025 in the Lok Sabha . Earlier, on 7 February 2025, the Union Cabinet had approved this bill. This new bill will replace the nearly 60-year-old Income Tax Act and will make the tax system simpler, transparent and more effective.

Proposed reforms in the new income tax bill

1. Use of ‘tax year’: The new bill will replace the term ‘assessment year’ with ‘tax year’, which will be a period of 12 months from 1 April to 31 March.
2. Tax Year for New Business: If a new business or work is started, its tax year will start from that day and end at the end of the same financial year.
3. Improved legal language: The new bill has simplified and shortened legal terms, making it easier to understand.
4. Legal documents have been reduced: The new Income Tax Bill is 622 pages long compared to the old 823 pages.
5. Chapters and sections increased: The number of chapters in the Bill remains 23, but the number of sections has increased from 298 to 536.
6. Schedules also expanded: The number of schedules increased from 14 to 16.
7. Removal of complex provisions: Complex explanations and provisions present in the old law have been removed, making it easier to understand.
8. Tighter rules on virtual digital assets: Virtual digital assets like cryptocurrencies will now be considered under undisclosed income.
9. Measures to curb tax evasion: Strict provisions on digital transactions and crypto assets have been implemented to enhance transparency and curb tax evasion.
10. Taxpayers Charter: The new bill also includes a Taxpayers Charter, which will protect the rights of taxpayers and make tax administration transparent.

Why was the new income tax bill introduced?

The existing Income Tax Act had become technically complex and practically cumbersome due to being several decades old. Changes were made in it from time to time, but it was not fully suited to today’s digital and modern economy. Therefore, the government has introduced the new Income Tax Bill 2025 to simplify the tax system, provide relief to taxpayers and simplify the compliance process.

The slab has been modified

Finance Minister Nirmala Sitharaman had announced the new tax slab in Budget 2025, which is as follows-

0 – 4 Lakh No Tax

4 – 8 Lakh 5%

8 – 12 Lakh 10%

12 – 16 Lakh 15%

16 – 20 Lakh 20%

20 – 24 Lakh 25%

Above Rs 24 Lakh 30%

Earlier the no-tax limit was Rs 7 lakh, which has been increased to Rs 12 lakh. This change will provide great relief to the middle class, as their taxable income will be taxed less than before.

There were many problems with the old law

The current Income Tax Act was implemented in 1961. Over the years, the Indian economy has seen many major changes, but the tax system was still based on the old structure. This was causing many problems to taxpayers. Here are some of the problems.

• There was difficulty in understanding complex tax rules.
• There were increased administrative hassles in filing and compliance of tax returns.
• The resolution of tax disputes was very slow and complicated.
• There were no proper provisions to properly accommodate the digital economy.

How will the common man benefit from the new tax law?

Middle class people will get relief as income up to Rs 12 lakh will be tax free. Apart from this, tax filing will be easy, paperwork will be reduced and online tax return filing will be promoted. The new settlement mechanism will resolve tax disputes quickly. At the same time, digital payments and business will get a boost due to this bill.

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According to reports, it will be introduced in Parliament on February 13, 2025. The aim of this new bill is to make the income tax system more transparent and comfortable for taxpayers.

The new income tax bill will be implemented from April 1, 2026

The government approved this bill on 7 February 2025. This new law will replace the old Income Tax Act in force since 1961. The government aims to simplify and modernize the tax system. According to reports, this bill will come into force from April 1, 2026 and its official name will be “Income Tax Act, 2025”.

Key highlights of the new Income Tax Bill

Simplifying tax rules : The tax system will be made more simple and taxpayer-friendly. Old and complex tax provisions will be removed and easy and clear rules will be implemented.

New system for resolving tax disputes : Special provisions will be added to resolve tax related matters faster. A digital dispute resolution system will be implemented to save taxpayers from unnecessary legal complications.

New powers to CBDT: Earlier, the Income Tax Department had to seek Parliament’s approval to implement various tax schemes. But under the new bill, the Central Board of Direct Taxes (CBDT) has been empowered to independently launch tax schemes. This will reduce bureaucratic delays and make tax administration more effective.

Digital Tax Monitoring: A new digital tax monitoring system will be implemented. This will make tax compliance easier and keep an eye on fraud.

Tax exemptions and deductions in the new bill

Annual income up to Rs 12 lakh will be tax free.

Standard Deduction

• ₹75,000 in the new tax regime
• ₹50,000 in the old tax regime

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