Parliament Panel Finalises Income Tax Bill Report

Why in the News?

The Parliamentary Select Committee has finalised its report on the Income Tax Bill, 2025, with 285 suggested changes. The bill aims to replace the Income Tax Act, 1961 to simplify tax laws and reduce compliance burden. This development marks a significant step in the ongoing efforts to modernize India’s tax system through public private partnership in legislative reform.

Parliamentary Panel’s Key Developments:

• The Select Committee, chaired by BJP MP Baijayant Panda, has finalised its report with around 285 suggestions. These suggestions aim to address various aspects of tax assessment and income tax exemptions.
• The report is expected to be tabled in the Monsoon Session, beginning July 21, 2025. This timing allows for thorough review and debate on the proposed changes, including those related to the assessment year structure.
• The Income Tax Bill, 2025 was introduced in Lok Sabha on February 13, and referred the same day to the Select Committee. This swift action underscores the government’s commitment to tax reform through public private partnership.
• The panel’s mandate was to submit the report by the first day of the Monsoon Session, ensuring timely consideration of the proposed changes, including updates to income tax exemption rules.
• The initiative is part of the Centre’s broader push to modernise tax legislation, addressing issues related to capital receipts, revenue receipts, and exempt income.

About Income Tax Acts and Legislative Reform:

• The Income Tax Act, 1961, is the primary law governing direct taxation in India. It has been the foundation of India’s tax system for over six decades, defining concepts such as assessment year and income tax exemption.
• It has undergone numerous amendments, making it complex and difficult for both taxpayers and administrators. This complexity has often led to disputes and the need for clarification from appellate authorities, particularly regarding capital receipts and revenue receipts.
• The Income Tax Bill, 2025 proposes a complete repeal and replacement of the 1961 Act. This comprehensive overhaul aims to address longstanding issues in the tax code, including the treatment of income tax exemptions.
• This aligns with the goal of making the law simpler, concise, and user-friendly. The new bill is expected to clarify various aspects of taxation, including the treatment of urban ladder companies and other modern business models, through public private partnership in policy formulation.
• The reform was announce