The new Income Tax Bill 2025 has officially been passed in the Lok Sabha — and it’s bringing some big changes for taxpayers. On Monday, August 11, 2025, Finance Minister Nirmala Sitharaman introduced the bill and got it cleared the very same day. The bill incorporates most of the recommendations made by the Select Committee headed by BJP MP Baijayant Panda.
Sitharaman presented the revised version, officially titled the Income Tax (No. 2) Bill, 2025, aimed at amending and strengthening tax laws. She also introduced the Taxation (Amendment) Bill, 2025.
Key Changes in the New Income Tax Bill 2025
The bill introduces several taxpayer-friendly measures, including:
- Simpler language in tax provisions.
- Consolidated deductions for easier calculations.
- Streamlined compliance through small, practical rules.
- Reduced penalties for certain offences to make the system more people-friendly.
Why the New Income Tax Bill 2025 Was Introduced
According to the bill, the government accepted almost all of the Select Committee’s suggestions and also made adjustments based on feedback from stakeholders.
The original Income Tax Bill 2025, introduced on February 13, was withdrawn last week after suggested changes. The new Income Tax (No. 2) Bill 2025 will replace the old Income Tax Act, 1961.
Benefits for Taxpayers
Some of the most impactful provisions include:
- Relaxed ITR Filing Rules – To claim a TDS (Tax Deducted at Source) refund, taxpayers won’t need to file the full ITR; a simpler form will be available.
- Refunds for Late Filers – Even if you miss the deadline, you’ll still be able to get your tax refund.
- Zero TDS Certificates – Get a certificate in advance to stop any tax deduction from your income.
Who Will Gain the Most from the New Income Tax Bill 2025?
If passed into law, the bill will also offer tax exemptions on lump sum pension withdrawals for:
- Self-employed professionals like doctors, lawyers, artists, and freelancers with approved pension fund investments.
- Private sector employees without company pensions who’ve invested in approved plans.
- Legal heirs or nominees receiving a lump sum after the pension account holder’s death.
- Group insurance pension beneficiaries who aren’t direct employees but receive benefits from approved funds.
With the new Income Tax Bill 2025, the government is pushing for simpler rules, fewer penalties, and a more taxpayer-friendly system — making it one of the most significant tax reforms in years.
