New Income Tax Bill 2025: Minister of Finance and Corporate Affairs Nirmala Sitharaman on August 11, 2025, Monday has introduced a New Income Tax Bill in Lok Sabha. This legislation is named The Income-Tax (No.2) Bill, 2025 and aims to consolidate and amend the law related to Income Tax. This has happened three days after the bill was withdrawn. The BJP MP Baijayant Panda had headed the 31-member Select Committee and had suggested a few changes to the legislation. The bill was approved by the house amid the uproar by opposition members.
What is the Income-Tax (No.2) Bill, 2025?
The new draft further simplifies the decades-old tax structure and helps individual taxpayers and MSMEs avoid unnecessary litigation. The current Income Tax Act was enacted in 1961. It has undergone more than 4,000 amendments and now comprises over five lakh words. This has made it highly complex. According to BJP MP Baijayant Panda, the new bill has simplified the law by nearly 50 per cent. Mr Panda said that the new bill has made it far easier for ordinary taxpayers to read and understand. Multiple drafting errors were flagged by the committee and amendments were also suggested to reduce ambiguity.
What is the objective of The New Income Tax Bill 2025?
The Income-Tax (No.2) Bill, 2025 aims to overhaul and simplify the country’s taxation framework for the first time in over six decades.
What are the key recommendations by the select committee?
Following are the key recommendations by the select committee-
1. Clause 21 (Annual value of property)- Remove the term “in normal course” and add a clear comparison between actual rent and “deemed rent” for vacation properties.
2. Clause 22 (deductions from house property income)- Specify that the 30 per cent standard deduction applies after deducting municipal taxes; extend pre-construction interest deduction to let out properties.
