🧾 Highlights of the Proposed Changes in the Income Tax Bill, 2025

India is poised for a major tax reform with the introduction of the Income Tax Bill, 2025, intended to replace the existing Income Tax Act of 1961. The new Bill aims to simplify the tax framework, reduce ambiguity, and align with modern business realities.

The Parliamentary Standing Committee has reviewed the draft and proposed significant changes to ensure consistency, taxpayer fairness, and administrative clarity.

🔍 Key Recommendations by the Committee

1️⃣ Refunds Allowed for Belated ITR Filings

• Original Proposal: Clause 263(1)(ix) proposed to deny refunds if the return was not filed within the due date.

• Revised Recommendation: This clause is proposed to be deleted, aligning with the current practice where refunds can still be claimed on belated returns (subject to conditions).

  
  

✅ Impact: Prevents undue hardship to genuine taxpayers and reduces unnecessary litigation.

2️⃣ Reinstatement of Section 80M Deduction

• The initial draft had removed the inter-corporate dividend deduction under Section 80M.

• The Committee recommends its restoration, allowing companies under the concessional tax regime of Section 115BAA to claim the deduction on dividends received from other companies.

✅ Impact: Avoids double taxation and promotes corporate tax efficiency, especially in holding-subsidiary structures.

3️⃣ Provision for NIL TDS Certificates

• Earlier, Clause 395 allowed only for lower TDS deduction certificates.

• The Committee now proposes the inclusion of NIL TDS deduction certificates, particularly useful for:

  
  

  • Loss-making entities

  • Charitable or tax-exempt institutions

  
  

✅ Impact: Prevents unnecessary blockage of working capital in non-taxable hands and improves cash flow for eligible entities.

📅 Proposed Effective Date

The revised Bill is expected to be implemented from April 1, 2026, following:

• Cabinet review of the Committee’s recommendations

• Approval and passage through Parliament

Further refinements and changes may be announced in due course.

🧠 Key Takeaway for Taxpayers

Taxpayers—especially corporates and exempt entities—should:

• Stay informed of evolving provisions under the new Bill

• Review the impact on refund claims, dividend taxation, and TDS compliance

• Begin aligning systems and documentation for the upcoming framework

Early understanding and preparation will ensure a smooth transition and full compliance with the new tax regime.

⚖️Disclaimer

This content is intended purely for informational purposes and does not constitute legal or professional advice. Readers are advised to consult a qualified Chartered Accountant or Company Secretary for personalized tax planning. This communication adheres to ICAI/ICSI guidelines and does not amount to solicitation.