The Income Tax Department on Tuesday clarified that the Income Tax Bill, 2025, does not propose any changes to existing tax rates, including those applicable to long-term capital gains (LTCG). The clarification comes amid speculation that the bill, introduced earlier this year, aimed to tweak tax structures.
"The Income Tax Bill, 2025 aims at language simplification and removal of redundant or obsolete provisions. It does not seek to change any rates of taxes,” the department said in a post on X. It also assured that any ambiguity on the issue would be addressed during the bill’s passage in Parliament.
Parliamentary panel submits report
The draft legislation, which seeks to replace the Income Tax Act of 1961, was introduced in the Lok Sabha in February and referred to a Select Committee for detailed examination. The committee, chaired by BJP MP Baijayant Panda, submitted its report on July 21 with 285 recommendations.
These include redrafting key definitions such as “capital asset”, “parent company”, and “micro or small enterprise” to better reflect contemporary law. The panel has also proposed restoring certain deductions, such as inter-corporate dividend exemptions, pre-construction interest on rented properties, and standard deductions for municipal taxes.
Relief for small taxpayers, charities
In a bid to ease compliance, the committee has recommended penalty waivers in cases of non-wilful non-compliance by small taxpayers, refund eligibility for late filers, and restoration of the "deemed application" clause for charitable trusts. It also pushed for the removal of residual references to the 1961 Act to make the new code more streamlined and litigation-resistant.
Implementation from FY26
The Finance Ministry is expected to incorporate most of the suggestions into the final version of the bill, which is likely to be passed during the ongoing Monsoon Session. Once enacted, the new law will come into effect from April 1, 2026, ushering in a modernised and simplified tax regime.
(With inputs from PTI)
