The Indian government has officially withdrawn the Income-Tax Bill, 2025, which was first presented in the Lok Sabha on February 13, 2025. This Bill aimed to replace the old Income-Tax Act of 1961, which has been in place for over six decades. The withdrawal took place on Friday, August 8, 2025, to prevent confusion from having multiple versions of the Bill in circulation.
A new, revised version of the Income-Tax Bill will be introduced on Monday, August 11, 2025. This updated Bill will include many recommendations from the Select Committee, which is led by BJP MP Baijayant Panda. Officials have stated that this step is necessary to provide lawmakers with a consolidated draft that reflects all proposed changes.
The updated Income-Tax Bill aims to simplify the language of tax laws, eliminate redundancies, and streamline processes, thereby enhancing the taxpayer experience. Sources mentioned that the government plans to implement the new law starting from April 1, 2026.
During the proceedings in Lok Sabha on Friday, the House was adjourned due to protests from opposition parties. These parties demanded discussions on the revision of electoral rolls in Bihar. Just before the adjournment, Finance Minister Nirmala Sitharaman moved to withdraw the previous Income-Tax Bill. The presiding officer, Krishna Prasad Tenneti, asked her to formally withdraw the Bill, which she did.
Parliamentary Affairs Minister Kiren Rijiju expressed disappointment over the protests, stating it was unfortunate that time was wasted when private member bills were on the agenda. He emphasized the government’s willingness to discuss various issues within parliamentary rules.
The Income-Tax Act of 1961 has undergone numerous amendments, with over 4,000 changes made since it was first enacted. The new Bill does not propose any changes to tax rates, including those for long-term capital gains (LTCG), as clarified by the Income Tax department. Any ambiguity regarding tax rates will be addressed during the Bill’s discussions.
The government aims for the new Income-Tax Bill to be a clear and modern approach to taxation, ensuring that it is easy for taxpayers to understand. The legislation is expected to simplify tax compliance and provide a better experience for taxpayers in India. As discussions continue, the public and stakeholders await the new version of the Bill and its potential impact on the Indian economy and taxpayers.