FM Sitharaman to introduce New Income Tax Bill in Lok Sabha today. Here's what to expect

The Finance Minister withdrew the earlier version of the Income Tax Bill, 2025, from the Lok Sabha last week.

Union Finance Minister Nirmala Sitharaman will introduce the revised the new Income Tax Bill, 2025 as cleared by a Select Committee, in the Lok Sabha today.

The Select Committee of the Lok Sabha made around 285 recommendations and submitted a detailed 4,500-page report to Parliament last month, proposing reforms to the bill. The original bill was introduced in February during the Budget session of Parliament.

The Finance Minister withdrew the earlier version of the Income Tax Bill, 2025, from the Lok Sabha last week. The Bill, which replaced the Income Tax Act, 1961, was introduced in the Lower House of the Parliament on 13 February earlier this year.

While withdrawing the Bill, the government said it would be coming out with an updated version of the Bill, which would include the changes suggested by the Select Committee.

What are the changes in the revised Income Tax Bill?

The revised bill incorporates most of the recommendations of the select committee, which examined the Income Tax Bill 2025 and submitted its report on July 21.

Those changes relate to simplifying the draft legislation's language. Other suggestions were also received and are required to be incorporated. The changes essentially relate to drafting, phrase alignment, consequential changes, and cross-referencing.

How Select Committee approached the bill?

The Bill, after being introduced in the House in February, was immediately referred to the Select Committee for its perusal.

The committee favoured the continuing of tax exemption on anonymous donations made to religious-cum-charitable trusts. The new Income Tax Bill exempts non-profit organisations from taxing anonymous donations received by religious trusts. However, the anonymous donations received by a religious trust which is also engaged in other charitable functions like running educational institutions and hospitals will not be a part of the exemption and will be taxed, the Bill says.

Why was the Income Tax bill withdrawn?

The Bill was withdrawn to avoid confusion by multiple versions of the Bill and to provide a clear and updated version with all changes incorporated.

"It is being presumed that there will be an absolutely new bill, ignoring the earlier bill for which a lot of work was done, and all the work done and time spent will go down," Parliamentary Affairs Minister Kiren Rijiju said on Saturday.

The minister made it clear that the apprehensions were ill-founded, as the new bill to be introduced will incorporate all the changes suggested by the Select Committee and accepted by the government.

The Lok Sabha Select Committee, chaired by BJP member Baijayant Panda, made 285 suggestions to the Income Tax Bill, which the government accepted.