In a surprise move during Friday’s Lok Sabha session, Finance Minister Nirmala Sitharaman withdrew the much-anticipated Income Tax Bill, 2025, signaling the government’s intent to table a more refined version after extensive recommendations from the Select Committee. The revised bill, aimed at overhauling the outdated Income Tax Act of 1961, will be introduced in Parliament on August 11, offering taxpayers and policy watchers a clearer look at the next phase of India’s fiscal reform.

According to sources, the fresh version will include the bulk of suggestions made by the 31-member Select Committee chaired by BJP MP Baijayant Panda. The move is meant to avoid confusion caused by multiple iterations of the same legislation and to ensure lawmakers deliberate over a consolidated draft with all changes built in. “A new version with all amendments incorporated will be tabled to streamline the process,” said an official source.

The original Bill, introduced on February 13, was seen as a landmark attempt to modernize and simplify India’s complex tax code. But it was swiftly referred to the Select Committee for further scrutiny. After months of review, the panel suggested significant changes, including provisions aimed at taxpayer relief and transparency.

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Among the committee’s key recommendations were the continuation of tax exemptions on anonymous donations to religious-cum-charitable trusts—a point of contention for many non-profits. In response, the government’s revised Bill is expected to maintain exemptions for purely religious trusts receiving such donations. However, trusts with mixed activities, such as those that also operate hospitals or schools, will see these anonymous contributions taxed under existing rules.

Another major suggestion included easing penalties around Tax Deducted at Source (TDS) refunds. The panel urged that taxpayers be allowed to claim TDS refunds even after missing the Income Tax Return (ITR) filing deadline, without incurring penal charges—a move that could offer relief to thousands of delayed filers.

With the new draft set for a Monday introduction, all eyes will be on how the government balances modernization, compliance, and taxpayer ease in one of the most consequential tax reforms in recent memory.

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