Union Finance Minister Nirmala Sitharaman introduced the Taxation Laws (Amendment) Bill, 2025, in the Lok Sabha, aiming to overhaul key provisions of the Income-tax Act, 1961, and the Finance Act, 2025. The legislation focuses on three major reforms, as outlined during the Monsoon Session of Parliament, to enhance tax clarity and economic ties.

The bill provides significant tax relief for subscribers of the Unified Pension Scheme (UPS), implemented from April 1, 2025, by extending all tax benefits previously available under the New Pension Scheme (NPS). This includes exemptions on up to 60% of the pension corpus at superannuation or voluntary retirement, ensuring financial security for retirees. The government announced in July 2025 that these benefits would align with NPS provisions to streamline pension taxation.

Additionally, the bill refines the block assessment framework for Income Tax search and seizure cases, introducing clearer rules for pending assessments and reassessments. This aims to reduce litigation and enhance compliance by simplifying procedures for taxpayers and authorities.

Also Read: Monsoon Session: New Income Tax Bill Incoming Big Changes Ahead!

A notable provision extends direct tax benefits to Saudi Arabia’s Public Investment Fund and its wholly owned subsidiaries under Section 10(23FE) of the Income-tax Act, recognizing a bilateral agreement to boost investment in India. This move strengthens economic ties with Saudi Arabia, a key player in global investment.

The bill, carrying the President’s recommendation under Articles 117 and 274 of the Constitution, is set for parliamentary debate. It reflects the government’s broader tax reform agenda, complementing the revised Income-Tax (No. 2) Bill, 2025, also tabled by Sitharaman, which incorporates 285 recommendations from a Select Committee chaired by Baijayant Panda to replace the 1961 Act.

Also Read: Game-Changing Income Tax Bill 2025 Hits Lok Sabha Monday