New Delhi: The Union government on Friday formally withdrew the Income-Tax Bill, 2025, which was originally introduced in the Lok Sabha earlier this year to replace the more than six-decade-old Income-Tax Act, 1961. Finance Minister Nirmala Sitharaman moved the motion for withdrawal in the Lower House.

The move comes just ahead of the introduction of a revised and updated version of the Bill, now scheduled to be presented in the Lok Sabha on Monday, August 11.

Sources indicate that the new version of the legislation will incorporate most of the suggestions made by the Parliamentary Select Committee, which had been tasked with reviewing the original draft. The committee, chaired by Baijayant Panda, submitted a series of recommendations aimed at streamlining the proposed law and addressing stakeholder concerns.

"To avoid confusion by multiple versions of the Bill and to provide a clear and updated version with all changes incorporated, the new version of the Income Tax Bill will be introduced for the consideration of the House on Monday," sources said.

Key changes likely in the revised draft

The Income-Tax Bill, 2025, initially introduced on February 13, was referred to a 31-member Select Committee shortly after its introduction. The committee proposed several changes during its review.

As reported by PTI, among the recommendations was a provision to retain tax exemptions on anonymous donations made to purely religious trusts. However, donations received by religious-cum-charitable trusts, such as those operating hospitals or educational institutions, would still be subject to tax, as per the latest draft.

Additionally, the committee favoured allowing taxpayers to claim TDS refunds even after the ITR filing deadline, without incurring any penal charges.

The government aims to present a more streamlined and contemporary tax law that addresses the complexities of the modern economy while ensuring transparency and taxpayer convenience. The new Bill is expected to replace the existing Income-Tax Act, 1961, once passed by Parliament.

PTI inputs