Parliament’s select committee examining the Income Tax Bill, 2025, may not recommend any significant changes to the new provisions but only suggest “simplification of language” in some clauses to remove ambiguity, a source privy to the matter told Moneycontrol.
“The select committee has almost finalised its report (on the new bill)… There are no major recommendations,” the person said. The committee, led by BJP MP Baijayant Panda, would submit its report to the government on the first day of the monsoon session, likely to begin in July’s third week.
The Income Tax Bill, 2025, was tabled by Finance Minister Nirmala Sitharaman in Parliament on February 13, as announced in the budget. The legislation seeks to repeal the Income Tax Act of 1961 and replace it with a simplified version. If passed, the new law will come into effect from April 1, 2026. Sources say the government is aiming to pass the bill in the upcoming winter session.
The Central Board of Direct Taxes, in the FAQs issued in February, had said that in the new bill, redundant provisions under the existing act have been removed; sub-sections and clauses have been used, instead of relying on provisos and explanations for exceptions and carve-outs; and a simplified system for cross-referencing of sections, sub-sections, clauses, etc., has been used. The bill includes extensive use of tables, formulae for enhanced clarity and consolidation of provisions scattered across various sections/chapters relating to a single issue.
“The focus primarily seems to be on refining the language of the Income Tax Bill, 2025, without proposing any substantive changes. Whether these linguistic tweaks will effectively address the intended policy goals and stakeholders’ concerns remains to be seen and can only be assessed once the revised text is available,” an tax expert said.
“In the new bill, cross-references need to be more contextual. Instead of saying ‘as provided in section so-and-so’, the law should briefly mention what that section is about. It saves time and makes the intent clearer,” pointed out by another tax expert.
Experts say that with no dramatic tax reforms in the new bill, long-drawn legal battles witnessed by tax courts in India over interpretation of definitions or substantive provisions of the law may continue to a cause of worry for taxpayers.
For instance, the complexities in the definition of the term ‘royalty’ in the current act have led to a slew of legal rulings with divergent interpretational conclusions. “Although the bill structurally simplifies the framework of the law, it is imperative that coherence is brought in terminologies and phrases inherited from the current law into the new bill, which have been the subject matter of litigation in the past,” another tax expert said.
Another tax expert said: “There have been representations from various industry stakeholders for further simplifying and rationalising provisions such as TDS (tax deducted at source) provisions. Also, there have been recommendations on some substantive provisions concerning intercorporate dividends deductions (current Section 80 M), LLP book profits taxation and tax refunds.”
