Revised Income Tax Bill Passed in Lok Sabha Amid Opposition Protests

Strategic Insights -

The Lok Sabha has passed a revised income tax bill, which aims to simplify the law's language, reduce bulk, eliminate redundancies, and enhance clarity. The Income Tax (No. 2) Bill, 2025, was introduced by finance minister Nirmala Sitharaman and passed without debate, despite protests from opposition parties over the revision of electoral rolls in Bihar. The bill incorporates changes suggested by the Select Committee of the Lok Sabha and proposes several taxpayer-friendly and streamlined taxation framework changes.

Key Takeaways:

  • The revised bill eliminates a clause that blocked refunds if returns were filed late, as recommended by the Select Committee.
  • The bill explicitly states that the 30% standard deduction is to be computed on the annual value as determined under clause 21, after deducting municipal taxes.
  • The revised bill now allows the deduction of pre-construction interest for let-out properties, aligning with the existing legal framework.
  • Section 93(1)(g) has been incorporated, granting a deduction for the entire amount of commuted pension to recipients not covered under clause 19.
  • The bill aims to consolidate "financial year" and "assessment year" into a single "tax year" for greater clarity.
  • The proposed changes and amendments aim to reflect a balanced, pragmatic, and taxpayer-oriented approach.
  • The bill has been welcomed by industry experts, with Dinesh Kanabar, CEO of Dhruva Advisors, stating that the clarification on standard deduction and pre-construction interest deduction is welcome.

Statistics:

  • Over 6 decades of the Income Tax Act, 1961, will be replaced by the revised bill.
  • The bill aims to simplify the law's language and reduce bulk by eliminating redundancies.
  • 30% standard deduction will be computed on the annual value as determined under clause 21.
  • Pre-construction interest worth ₹5 lakhs is allowed for let-out properties.
  • Section 93(1)(g) grants a deduction for the entire amount of commuted pension to recipients not covered under clause 19.

Sources:

  • "Revised income tax bill passed in Lok Sabha amid opposition protests," ABP Private Limited.
  • "Income Tax (No. 2) Bill, 2025," Lok Sabha.
  • "Dhruva Advisors CEO welcomes clarification on standard deduction and pre-construction interest deduction in income tax bill," ABP Private Limited.