A Parliamentary Select Committee has unanimously approved the Income Tax Bill, 2025, bringing India a step closer to overhauling its six-decade-old tax framework. The report—spread over seven volumes and 3,790 pages—has retained the core structure of the Bill while recommending 285 amendments for textual clarity.
The new bill aims to replace the Income Tax Act of 1961, making the system more streamlined, transparent, and technology-friendly. It empowers the Central government to create new schemes that promote efficiency and accountability.
One of the most significant changes includes widening the scope of undisclosed income to include virtual digital assets like cryptocurrencies. According to PRS Legislative Research,
“The Act also empowers the authorities to inspect electronic documents… and also allows authorities to gain access to a virtual digital space during search and seizure proceedings… by overriding any required access code.”
Key Highlights of the Bill:
- Introduces taxation on crypto-assets and virtual digital spaces
- Retains faceless verification and assessment, despite industry concerns
- No immediate changes to Tax Deducted at Source (TDS) structure
- Provides incentives for startups, cooperative societies, and digital transactions
- Aims to simplify terminology, replacing “assessment year” with “tax year”
- Adds clarity on capital gains, non-resident taxation, anti-avoidance rules, and transfer pricing
Committee’s Consensus and Next Steps
The Select Committee, chaired by Baijayant Panda, held 35 meetings before approving the draft.
“Chaired today’s meeting of the Select Committee of Lok Sabha to examine the Income-Tax Bill 2025… along with the proposed amendments,”
Panda tweeted.
Despite suggestions from tax bodies to soften TDS rules and reconsider faceless assessments, the panel maintained the original provisions.
“Such policy decisions can come only during the Budgets or in the Finance Bill,”
said a senior official involved in the discussions.
The Bill is now scheduled for debate and passage during the monsoon session of Parliament, which begins on July 21.
Expert Reactions
Sunil Bhansali, Chartered Accountant and managing partner at Oswal Sunil & Co., described the bill as:
“In favour of Assessee… The bill brings clarity in the IT laws, making it more user-friendly.”
On faceless assessments, he added:
“It reduces possibilities of malpractices of IT officials… but assessment officers often grapple with the large amount of papers, especially for big businesses.”
Bhansali also recommended uniformity in TDS rates, which currently range from 1% to 10%.
The Income Tax Bill, 2025, introduced in Lok Sabha on February 13, aligns with India’s Digital Governance Policy and is part of a broader effort to replace outdated colonial-era laws, including the recently revamped Indian Penal Code and labour codes.
With rare unanimity among MPs, the bill sets the stage for what could be a historic transformation in India’s tax landscape, focusing on ease of living, ease of doing business, and building a digital-first economy.