The central government has formally withdrawn the Income Tax Bill, 2025, which was introduced in the Lok Sabha earlier this year to replace the outdated Income Tax Act of 1961.
A revised version of the bill is set to be tabled on August 11, incorporating recommendations from the Select Committee chaired by BJP MP Baijayant Panda.
The decision to withdraw the original draft stems from concerns over confusion caused by multiple versions. The new bill, expected to be implemented from April 1, 2026, aims to streamline tax provisions, reduce legal disputes, and simplify compliance for taxpayers.
According to sources, the revised bill will feature:
- Replacement of terms like “assessment year” and “previous year” with “tax year”
- No changes to short-term capital gains tax rates or duration
- Clearer treatment of ESOPs and inclusion of judicial precedents from the past 60 years
- A trimmed structure with 23 chapters and 536 clauses for better clarity
Finance Minister Nirmala Sitharaman, during her Budget Speech 2025, emphasised that the bill reflects the philosophy of “Nyaya” embedded in the Bharatiya Nyaya Sanhita, promising a more transparent and trust-based tax system.
