Nirmala Sitharaman to table revised Tax Bill.
The decision came after extensive deliberations and feedback from stakeholders, paving the way for the introduction of a revised version of the bill.
New Delhi: Union Finance Minister Nirmala Sitharaman is gearing up to present the much-anticipated revised Income Tax Bill, 2025 in the Lok Sabha on Monday.
This updated bill is not just a tweak to the old rules — it’s a significant overhaul aimed at making India’s direct tax system simpler, fairer, and easier to understand. The government has incorporated as many as 285 suggestions from the Parliamentary Select Committee, reflecting feedback from MPs, tax experts, industry representatives, and ordinary citizens.
The Income Tax Bill, 2025 is designed to replace the decades-old Income Tax Act, 1961, which, over the years, has become notoriously complicated. According to officials, the new legislation is expected to cut through the legal jargon and red tape that have made tax filing a dreaded annual exercise for many Indians.
Just last week, the government formally withdrew an earlier version of the Income Tax Bill, 2025 that had been tabled in the Lok Sabha on February 13. That first draft aimed to replace the existing 1961 Act, but after extensive discussions and inputs, it was clear that a more refined, comprehensive version was needed.
The withdrawal cleared the way for the revised bill — a version that lawmakers hope will finally deliver a modern, citizen-friendly tax framework.
BJP MP Baijayant Panda, who chaired the Parliamentary Select Committee reviewing the bill, explained why a fresh start was necessary.
It has simply become too complex,” Panda said. “The new bill reduces that complexity by almost 50 per cent, making it far easier for ordinary taxpayers to read and understand.”
Panda emphasised that the greatest beneficiaries of this change will be small business owners and micro, small and medium enterprises (MSMEs) — groups that often lack the legal and financial muscle to navigate India’s complicated tax maze.
Fairness at the heart of the reformAccording to the Finance Ministry, one of the key goals of the new bill is to create a fairer and more equitable system of direct taxation. The government has assured that the reforms will not place any additional burden of direct taxes on the working and middle-class population.
A headline change in the Finance Act, 2025 — which is linked to the new bill — is the increase in the income threshold for tax rebate claims under section 87A of the Income Tax Act. For residents taxed under the new regime (section 115BAC), the rebate limit will now apply to those earning up to ₹12 lakh, up from the previous ₹7 lakh.
This means a significant chunk of middle-income earners could see their tax liability drop to zero.
For those whose incomes are slightly over ₹12 lakh, marginal relief provisions — already available in the new regime — will still apply, ensuring they don’t end up paying disproportionately more in taxes.
Easier for everyone — from citizens to startupsThe Finance Ministry says that apart from lowering the compliance burden, the revised bill aims to make the process of filing taxes faster and more transparent. By reducing unnecessary litigation and clearing up vague provisions, the law hopes to free up both taxpayers and the tax department to focus on genuine issues rather than procedural disputes.
For ordinary citizens, this means fewer headaches during tax season. For small businesses and MSMEs, it could free up time and resources to focus on growth instead of paperwork.
A historic shift in India’s tax story?While tax reforms are often technical and slow to gain public attention, experts believe the Income Tax Bill, 2025 could be one of the most important legislative changes in recent years.
Replacing a 64-year-old law is no small feat. The original Income Tax Act, 1961 has been amended thousands of times to keep pace with changing economic realities, but each amendment added more layers of complexity. The result is a sprawling, difficult-to-navigate set of rules that even professionals sometimes struggle to interpret.
If Parliament passes the new bill in its current form, India could have a streamlined, 21st-century tax code — one that is not only easier to read but also designed to adapt more smoothly to future changes.
In short, the revised Income Tax Bill, 2025 is more than just a policy update — it’s a reset button for the country’s entire direct taxation system. Whether it delivers on its promises will depend on how well it is implemented, but for now, the mood in New Delhi suggests cautious optimism that taxpayers, especially those in the middle class and small business sectors, may finally get the clarity and fairness they’ve long been asking for.