Parliament panel gives report on new Income Tax Bill, suggests some tweaks
This story was originally published at 19:36 IST on 21 July 2025
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NEW DELHI – The Parliamentary committee set up to examine the Income Tax Bill, 2025 tabled its report in the Lok Sabha on Monday. It recommended a number of tweaks to the new bill that was introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman in February.
The committee suggested that the Bill should be amended to allow carry forward and set-off of losses where the shareholding pattern, though altered temporarily, is restored in subsequent years and the 51% continuity requirement is met thereafter. "This would preserve the legislative intent of preventing misuse while ensuring fair treatment for companies whose shareholders remain ultimately liable to tax," the report said.
The business advisory committee of the Lok Sabha Monday decided to take up the tax bill for consideration and passing this week. According to a committee member, the committee has allotted 12 hours time for the discussion on the bill.
Rohinton Sidhwa, Partner at Deloitte India in a note said, "One will now have to look at the ultimate holding of the individual--it may be administratively difficult to obtain such details especially where the shareholder is a fund or similar organisation."
The committee noted that the benefit of tax deduction relevant to inter corporate dividends in multi-tiered structures must also be extended to companies opting 22% tax rate, said Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co., in a text message.
The committee also asked the finance ministry to rectify a number of drafting errors in the Bill. The committee led by Bharatiya Janata Party's Baijayant Panda comprises 31 members, including the Bhartruhari Mahtab and Naveen Jindal from the BJP; the Trinamool Congress' Mahua Moitra, the Revolutionary Socialist Party's N.K. Premachandran, and the Nationalist Congress Party's (SCP's) Supriya Sule, among others.
The panel also said that the current requirement to file a return solely for the purpose of claiming a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source. It suggested that the law should not compel a return merely to avoid penal provisions for non-filing.
The new bill proposed "substantial" changes to the original Income Tax Act, 1961, Sitharaman had said while introducing it. Members of the Opposition had claimed that only "mechanical" changes had been made to the older Act, and barely any simplification could be seen.
Announced in the full Budget for 2024-25 (Apr-Mar), the new Income Tax Bill aims to simplify the Income Tax Act, 1961, make it more lucid and easier for taxpayers to calculate taxes and file returns. Following the announcement, the Central Board of Direct Taxes had set up an internal committee in October to carry out a comprehensive review of the Income Tax Act.
The proposed Income Tax Bill, 2025 has 536 sections and 23 chapters spread across 622 pages, 201 pages fewer than the older Act. The document has been shortened primarily by removing explanations.
The committee also highlighted that the new Bill may introduce confusion among non-profit organisations, especially those with mixed charitable and religious objectives. "This ambiguity could lead to uncertainty for existing trusts and those established after 1961, increasing litigation risks," it said.
Riaz Thingna, Partner at Grant Thornton Bharat said there are no substantive changes proposed by the committee but the recommendations are well intended and would help in providing clarity to the taxpayer and reduce litigation. End
Reported by Sagar Sen
Edited by Akul Nishant Akhoury
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