On Monday, Union Finance Minister Nirmala Sitharaman unveiled the updated New Income Tax Bill, 2025, which aims to replace the current Income Tax Act of 1961. This revised Bill was introduced after incorporating nearly all recommendations from the Select Committee.

The Finance Minister presented the amended Bill following the suggestions made by the Select Committee, chaired by BJP MP Baijayant Panda, regarding the original Income Tax Bill, 2025.

“The government has accepted almost all recommendations from the Select Committee. Furthermore, feedback from stakeholders has been considered to ensure that the proposed legal meanings are conveyed more accurately,” stated the bill’s objects and reasons.

While presenting the Bill, Nirmala Sitharaman noted that The Income-Tax (No.2) Bill, 2025 aims to consolidate and amend the laws related to income tax, effectively replacing the existing Act.

On Friday, Sitharaman withdrew the original New Income Tax Bill, 2025 during the Monsoon Session of the Lok Sabha.

Parliamentary Affairs Minister Kiren Rijiju confirmed on Saturday that Nirmala Sitharaman would introduce the revised Bill in Parliament on August 11.

Rijiju remarked, “There is a presumption that a completely new bill will be introduced, disregarding the previous bill, which involved significant effort and time.”

After withdrawing the initial version of the New Income Tax Bill, the Centre announced it would issue an updated version that reflects the suggestions made by the 31-member Select Committee of Parliament.

What modifications are included in the New Income Tax Bill, 2025?

Nirmala Sitharaman withdrew the earlier version of the Bill on Friday to prevent confusion arising from multiple versions and to ensure a clear and updated version that includes all changes.

“There are amendments concerning the drafting process, phrase alignment, consequential modifications, and cross-referencing. As a result, the government has decided to withdraw the Income-tax Bill, 2025, as indicated by the Select Committee. In its place, the Income-tax (No. 2) Bill, 2025 has been drafted to supersede the Income-tax Act, 1961,” the statement of objects and reasons states.

The Select Committee, in its findings, pinpointed numerous drafting corrections based on feedback from stakeholders, which they consider vital for ensuring clarity and unambiguous interpretation of the proposed bill.

Overall, the parliamentary panel provided a total of 566 suggestions and recommendations in its extensive 4,584-page report.

One of the proposed changes by the Select Committee pertains to income tax refunds, aiming to eliminate the clause that disallows refunds if the Income Tax Return (ITR) is submitted after the deadline. The previous iteration of the Bill mandated that individuals seeking refunds must file their ITR by the due date.