FM Sitharaman tables new Income Tax Bill 2025 in Lok Sabha

Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Monday tabled the new Income Tax bill, 2025, in Lok Sabha. The bill is set to replace the current Income Tax Act 1961.

The new bill will include amendments made by the 31-member Select committee headed by BJP MP Baijayant Panda. One major goal was to make procedures simple and deal with the long-standing challenges in Tax management. The old act, which contains archaic language and was edited over 4000 times, had become complicated to decipher.

The new draft is expected to incorporate most of the 285 recommendations. Key provisions include limiting anonymous donations exclusively to purely religious trusts, excluding those that also run social services; allowing taxpayers to claim TDS refunds after the ITR filing deadline without penalties; and requiring tax officials to issue notices and consider responses before taking action.

The Bill also seeks to modernize the system through a digital-first, faceless assessment framework to ease compliance and reduce corruption risks. The legal language of the 1961 Act will be replaced with clearer, more accessible terms for public understanding.

If passed, the legislation will replace the 63-year-old Income-tax Act with a modern, simplified, and litigation-resistant direct tax code — a step the government calls one of the most ambitious tax reforms in recent decades.