Income-Tax Bill 2025: Panel proposes relief measures for small taxpayers, property owners

The report of the parliamentary panel on the new Income-Tax Bill was presented in the Lok Sabha on Monday. The panel examined the Income-tax Bill 2025, which seeks to simplify the language and structure of the Income Tax Act 1961 and submitted its report. It has suggested important changes to tighten definitions, remove ambiguities, and align the new law with existing frameworks.

The report of the Select Committee on the new Income-Tax Bill was presented in Lok Sabha on Monday by the panel chairman, Baijayant Panda.

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According to the reports, the simplification exercise in the new Income Tax bill is guided by three core principles – textual and structural simplification, no major tax policy changes and no modifications of tax rates.

Apart from eliminating intricate language to enhance readability, the text of the bill removes redundant and repetitive provisions for better navigation and reorganizes sections logically to facilitate ease of reference, the report added.

The committee suggested removing the clause of the mandatory requirement of filing a return to claim a refund by small taxpayers whose income falls below the taxable threshold, but from whom tax has been deducted at source. Flexibility should be given to such taxpayers and they should be allowed to claim a refund even in cases where the return is not filed in due time.

To give relief to property owners, it is suggested that the standard 30% deduction should be computed on the annual value of the property after deducting municipal taxes and to ensure that a deduction for pre-construction interest should be given for let-out properties along with self-occupied ones, as given in the existing IT Act.

To give significant relief to taxpayers, the committee has suggested changing the provision which disallows refunds if income tax returns are filed beyond the due date. It also said the law should not compel a return merely to avoid penal provisions for non-filing.

The Committee has submitted a 4,584 page report where it identified several drafting corrections based on stakeholder suggestions, which they believe are essential for clarity and unambiguous interpretation of the new bill.

The parliamentary panel has made a total of 566 suggestions/recommendations in its report.

Further, out of 20,976 online suggestions received, relevant suggestions were examined and incorporated in the new bill, where feasible. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.