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New Delhi: Taxpayers have good news. The 64-year-old IT law is set to undergo significant revisions. A parliamentary committee has put forth recommendations concerning the Income Tax Bill, 2025. The committee's report has presented its findings to the Lok Sabha on Monday, including a total of 566 recommendations. One of the most important recommendations highlights relief to taxpayers. The committee suggests that a person who does not file Income Tax Return (ITR) within the deadline should still be eligible for a refund without any cash refund.
Also, the committee believes that taxpayers should not be compelled to file ITRs only to evade penalties. The committee has recommended that small taxpayers, whose earnings lie below the taxable limit, but from whom tax has been deducted as TDS, should be relieved of the necessity to file returns in order to claim refund. Such taxpayers should be permitted to claim refund without the necessity of filing returns. The committee has also put forth the suggestion to allow claiming refunds of TDS beyond the cutoff date for filing ITR without any penalties for late refund claims.
Standard Deduction
In response to property owners' issues, the committee proposes that standard deductions should be 30%. This deduction should, however, be available only after the municipal tax has been deducted from the annual value of the property. Also, the pre construction interest deduction should be available for both self-occupied and let-out properties, just as the current IT Act provides. Other changes mentioned are reduction of ruling fees, TDS on provident fund, low-tax certificate, and the powers of penalty.
The committee has also proposed to integrate the definition of micro, small and medium enterprises with the Act on MSME. For other non-profit entities, the committee has sought explanations for ‘receipts’ versus ‘income’ as well as anonymous donations and the deemed application concept. The committee proposes these so that legal conflicts are minimized. The committee has recommended continuing the tax shelter for anonymous donations to religious and charitable trusts in the new Income Tax Bill. These non-profit entities, the committee argues, would be negatively impacted if such exemptions are not available.
What will be the benefit
A new Income Tax Bill is created to eliminate obsolete procedures. It was proposed in the Parliament on 13 February. It aims to revise the Income Tax Act of 1961 to enhance clarity and reorganize its framework. It was sent to the committee for detailed examination. The finance minister Nirmala Sitharaman mentioned that, for the 21st century, this bill is essential. It will improve the overall efficiency of the tax system.
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