Lok Sabha Fast-Tracks Major Tax Overhaul Amid Fiery Opposition Clashes over SIR

In a whirlwind session marked by chaos and controversy, the Lok Sabha on Monday swiftly passed two pivotal taxation bills without any debate, as opposition members vociferously protested alleged irregularities in Bihar's electoral rolls. The Income-Tax (No.2) Bill, 2025, and the Taxation Laws (Amendment) Bill, 2025, were introduced by Finance Minister Nirmala Sitharaman and approved via voice vote amid the din, leading to an immediate adjournment for the day.

The Income-Tax (No.2) Bill, 2025, aims to consolidate and modernize the Income Tax Act of 1961, spanning 23 chapters, 536 sections, and 16 schedules, with no immediate changes to existing tax rates or slabs for the 2025-26 financial year. Set to take effect from April 1, 2026, the bill introduces expanded deductions and incentives for health insurance, housing loans, electric vehicle purchases, donations, and Special Economic Zone (SEZ) developments, while simplifying compliance for digital assets and non-residents. Experts hail it as a step toward a "simple and lucid" tax regime, retaining most provisions from the 1961 Act but updating definitions and reducing certain penalties to boost investment and employment.

Complementing this, the Taxation Laws (Amendment) Bill, 2025, amends the Income-tax Act, 1961, and the Finance Act, 2025, incorporating measures to align with the government's financial proposals for the year. It defines a "Tax Year" as the financial year starting April 1 and includes tweaks to direct and indirect taxes, though specifics on rates remain unchanged. These reforms follow the withdrawal of an earlier draft in February, revised based on Select Committee recommendations to enhance clarity and taxpayer-friendly provisions.

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The passage occurred against a backdrop of intense opposition protests over the Special Intensive Revision (SIR) of electoral rolls in Bihar, ahead of the state's assembly elections scheduled for October or November 2025. INDIA bloc leaders, including Rahul Gandhi, Priyanka Gandhi Vadra, Akhilesh Yadav, and Mallikarjun Kharge, led a dramatic march from Parliament to the Election Commission of India (ECI), accusing the process of enabling "vote chori" (vote theft) and linking it to alleged fraud in the 2024 Lok Sabha polls. Protesters, wearing caps marked with a red cross over "SIR," were detained by Delhi Police after being stopped at barricades, with scenes of Yadav jumping over barriers and MPs like Mahua Moitra climbing them going viral. The ECI noted no formal objections had been filed despite the presence of booth-level agents from major parties, while the BJP dismissed the agitation as a "well-thought-out strategy to create anarchy."

Critics argue the rushed approval of the tax bills undermines democratic debate, especially amid such distractions. The opposition's focus on Bihar's voter lists—recently updated with reports of erroneous entries like wrong photos and deceased individuals—highlights growing concerns over electoral integrity in the poll-bound state. As both houses adjourned early due to the uproar, questions linger on whether these tax reforms will truly simplify India's complex fiscal landscape or if the political storm will overshadow their implementation.

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