The Government of India has withdrawn the Income Tax Bill, 2025 from the Lok Sabha, only to bring it back in a revised form within days. On August 8, 2025, Parliamentary Affairs Minister Kiren Rijiju announced the withdrawal, explaining that it was necessary to merge feedback from the Select Committee into a single, updated draft to avoid confusion from multiple versions. The revised bill is scheduled for reintroduction on August 11, 2025, retaining the original’s core framework but with significant amendments.
Aims of the Revised Bill
The updated draft focuses on simplifying the tax structure and reducing the compliance burden for middle-class taxpayers, micro, small and medium enterprises (MSMEs), and individual filers. It promises higher rebates and a fairer tax regime. Another key proposal is a time-bound mechanism for resolving tax disputes, which could reduce litigation and speed up case closures.
Highlights of the Original Bill
The original bill, introduced by Finance Minister Nirmala Sitharaman on February 13, 2025, aimed to replace the Income Tax Act of 1961 with a modern, streamlined law. It featured simplified language, removal of outdated provisions, and a clearer format. One notable change was replacing “assessment year” with “tax year,” aligning taxation with the income year for better clarity.
The bill also sought to expand the powers of tax authorities to conduct searches in virtual digital spaces—including emails, social media accounts, trading platforms, and banking systems. While intended to improve enforcement, these provisions drew privacy concerns from several quarters.
Select Committee’s Role
Following its introduction, the bill was referred to a parliamentary Select Committee, which delivered around 285 recommendations on July 21, 2025. These suggestions covered language clarity, taxpayer protections, and operational timelines.
Timeline of Key Events
| Date | Event |
|---|---|
| Feb 13, 2025 | Original bill introduced in Lok Sabha |
| Jul 21, 2025 | Select Committee submits ~285 suggestions |
| Aug 8, 2025 | Bill withdrawn for revisions |
| Aug 11, 2025* | Revised bill to be reintroduced (expected) |
The upcoming reintroduction will be closely watched, as the government seeks to balance modernization, ease of compliance, and taxpayer rights while addressing concerns over privacy and enforcement powers. If passed, the bill could mark the most significant overhaul of India’s income tax framework in over six decades.
