New Income Tax Bill 2025: 10 Major Recommendations by Parliamentary Panel Ahead of August 11 Introduction

Stricter Definitions: The committee recommended tightening various definitions in the bill to remove ambiguities and better align them with the existing Income Tax framework.

Removal of Refund Rule: It suggested eliminating the clause denying income tax refunds for late Income Tax Return (ITR) filings, thus allowing refunds even if the ITR is filed late.

Section 80M Modification: Recommendations were made to amend the provision related to inter-corporate dividend deductions for companies receiving special tax rates, improving clarity.

Zero TDS Certificates: The panel proposed allowing taxpayers the option to obtain zero Tax Deducted at Source (TDS) certificates to ease compliance and reduce unnecessary deductions.

Definition of MSMEs: It is advised that the bill’s definition of micro and small enterprises should conform strictly to the Micro, Small and Medium Enterprises (MSME) Act, ensuring consistency in tax treatment.

Advance Ruling Clarity: Changes were proposed to clarify fees and procedures related to advance rulings, making the process more transparent for taxpayers.

TDS on Provident Fund: The committee recommended clearer provisions regarding TDS applicability on provident fund withdrawals, removing present uncertainties.

Lower Tax Certificates: The bill should incorporate provisions relating to the issuance and use of lower tax deduction certificates, helping eligible taxpayers benefit accordingly.

Penalty Powers: Suggestions were made to restrict the penalties imposed under the bill to be fairer and avoid undue burden on taxpayers, enabling discretion to waive penalties for non-deliberate defaults.

Alignment with Existing System: Most recommendations focus on harmonizing the new bill with the current Income Tax Act, 1961, to reduce litigation and ensure smoother transition without abrupt policy changes.