Nirmala Sitharaman Withdraws Income Tax Bill, Fresh Draft Set for Aug 11

Fast Summary

• Union Finance Minister Nirmala sitharaman withdrew the income Tax Bill, 2025, in the Lok Sabha on August 8, 2025.
• A revised version of the bill will be introduced on August 11 after incorporating suggestions from the Select Committee.
• The Income Tax Bill aims to replace the six-decade-old Income Tax Act of 1961.
• Recommendations by a Select Committee chaired by Baijayant Panda include allowing taxpayers to claim TDS refunds post the ITR filing deadline without penalty and continuing tax exemptions for anonymous donations to religious-cum-charitable trusts.
• The updated bill exempts purely religious trusts from taxes on anonymous donations but imposes taxes on such donations for trusts involved in both religious and additional charitable functions, like running hospitals or schools.

Indian Opinion Analysis

The withdrawal and planned reintroduction of a revised Income Tax Bill reflect IndiaS approach toward thorough legislative reform before replacing an outdated law. By incorporating feedback from lawmakers through a Select Committee process, this development demonstrates efforts to enhance clarity and inclusiveness in policy framing. Specific provisions like tax exemptions for purely religious trusts promote consistency with existing practices but could raise discussions around equitability when compared with mixed-function charitable organizations. Additionally, changes aimed at easing taxpayer compliance-such as allowing late TDS refunds-signal increased government attention toward streamlining administrative procedures.

If effectively implemented, these revisions may achieve dual goals: modernize taxation laws while reducing friction points for taxpayers. Though, their success hinges upon clear communication and execution within India’s complex fiscal ecosystem.

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