The 31-member Lok Sabha select committee on the Income Tax Bill, 2025 has recommended over 30 changes to the bill, including definitions, clarification on various deductions, and the reinstatement of a few provisions that were dropped from the bill. The report of the committee led by BJP leader Baijayant Panda was presented to the Lok Sabha on Monday.
Key Highlights
- Lok Sabha panel recommends over 30 amendments, including extending TDS refund deadlines without penalties.
- Committee suggests time‑bound tax litigation resolution and reinstating inter‑corporate dividend deductions, aiming to simplify reforms.
The committee suggested changes to the definitions of capital asset, infrastructure capital company, and MSME, as well as clarifying property-related deductions and reinforcing the 'actual payment' rule for business expenses.
The committee has proposed a reinstatement provision that allows the tax department to issue a nil withholding tax certificate for specific payments. This clause was originally omitted from the draft bill, which only allowed certificates for low TDS deductions. It has also recommended allowing refund claims even if returns are not filed on time.
The report also addresses charitable and not-for-profit entities' concerns by advocating for clearer definitions, replacing "receipts" with "income" for tax purposes, and restoring the concept of "deemed application". It also advocates for the inclusion of professionals in electronic payment standards, specifies qualification requirements for valuers, and recommends contextual fairness in GAAR provisions.
In a significant relief, the committee stated that the benefit of the tax deduction applicable to inter-corporate dividends in multi-tiered structures must also be extended to companies that chose the 22% tax rate, as is currently the case.
The Income Tax Bill, 2025, was tabled in February and referred to the select committee for any proposed changes.The Income Tax Bill was drafted to simplify the country's tax rules. The bill avoided structural changes and instead focused on simplifying the language. In addition, the select committee's report makes no significant recommendations.
According to Rohinton Sidhwa, Partner, Deloitte India, the majority of the amendments in the most recent round are corrective in nature, aimed at correcting drafting errors from the first draft released for public comment.
The report clarified that recommendations for policy-level changes are beyond the scope and objectives of the IT Bill, 2025. In fact, the finance ministry has rejected some proposed changes, stating "that several suggestions received were outside the purview of the Committee's mandate."
Also Read: New Income Tax Bill 2025: Key TDS Refund Claim Changes Backed by Parliamentary Panel Insights
"Key stakeholder recommendations that appear to have made their way through relate to correcting drafting errors, removing ambiguities arising from language changes to the existing Act, and coherent presentation of tax provisions," says Gouri Puri, partner at Shardul Amarchand Mangaldas & Co.
