On the Income Tax Bill, 2025, the 31-member select committee of the Lok Sabha suggested over 30 amendments in the bill, along with the definitions, clarification on various deductions, as well as reinstatement of a few provisions dropped in the bill. The report of the committee headed by BJP leader Baijayant Panda was presented in the Lok Sabha.
In the definition of capital asset, infrastructure capital company, MSME, amendments have been recommended by the committee while explaining property-related deductions, and reinforcing the ‘actual payment’ rule for business expenses.
The reinstatement provision has been offered by the committee to authorise the tax department to issue a nil withholding tax certificate for particular payments. From the draft bill, the same clause was removed, which earlier only allowed certificates for low TDS deductions. It suggests allowing the refund claims even where the returns are not submitted in time.
The report addresses matters of charitable and not-for-profit entities via advocating clearer definitions, substituting “receipts” with “income” for tax purposes, and restoring the concept of “deemed application”. Also, it recommends inclusion of professionals under electronic payment norms, prescribes qualifications for valuers, and recommends contextual fairness in GAAR provisions.
In relief, the committee said that the benefit of tax deduction pertinent to inter-corporate dividends in multi-tiered structures should be extended to companies that opt for the 22% tax rate, as is the case now.
In February, the Income Tax Bill, 2025, was introduced and referred to the select committee for proposing changes, if any. To ease the tax norms of the country, the Income Tax Bill has been drafted. From making any structural amendments, the bill has stayed away and focused on easing the language. No amendment has been suggested by the select committee in its report.
The majority of the revisions in the latest round are corrective and specify correcting the errors in drafting from the first draft released for public comment.
As per the report, suggestions comprising policy-level amendments go beyond the extent and objectives of the IT Bill 2025. Also, certain modifications have been rejected by the finance ministry by citing suggestions “that several suggestions received were outside the purview of the Committee’s mandate.”
Stakeholder suggestions concern correction in drafting errors, removal of ambiguities deriving from language changes to the extant Act, and coherent presentation of tax provisions.