The Indian government has withdrawn the Income Tax Bill 2025, which was initially introduced to replace the Income-Tax Act, 1961. A revised version of the bill, incorporating recommendations from the Select Committee led by Shri Baijayant Panda, is scheduled to be introduced on August 11, 2025. The withdrawal aims to prevent confusion arising from multiple versions of the Bill and to present a consolidated version for debate.
The Income Tax Bill 2025 was first introduced in the Lok Sabha on February 13 with the aim of simplifying the language and structure of the Income Tax Act 1961. The bill sought to modernize tax law with simpler language, aiming to be about 50% shorter than the existing statute. It was billed as the most significant overhaul of India's direct tax law in more than 60 years.
The Select Committee, consisting of 31 members and headed by BJP MP Baijayant Panda, examined the Income-tax Bill 2025 and submitted its report, identifying several drafting corrections based on stakeholder suggestions. The committee's 4,584-page report contained 566 suggestions and recommendations.
Key recommendations from the panel include:
The revised bill aims to retain the simplification intent of the original bill while adding clarity to ensure no ambiguity arises. A core goal is to reduce interpretation disputes and align scattered tax provisions under a more coherent structure. One potentially contentious provision in the original draft concerned search and seizure powers of tax officials, proposing to allow officers to access digital devices, even bypassing passwords, in specific cases involving undisclosed income or foreign assets. The updated bill may address this provision.
The new version of the Income Tax Bill, incorporating most of the recommendations made by the Select Committee, will be introduced for the consideration of the House on Monday, August 11.
