Rapid Fire
Income Tax Bill, 2025
- 16 Aug 2025
- 3 min read
Both houses of the Parliament passed the Income Tax Bill, 2025, which seeks to simplify, rationalise, and shorten the existing Income Tax 1961 Act.
- The Bill defines virtual digital space as any digital environment including email, social media, online accounts, cloud servers, websites, and digital platforms.
- If retained, tax authorities could access or bypass passwords to investigate potential tax evasion or under-reported income, with companies potentially required to assist.
- It replaces the dual concepts of ‘assessment year’ and ‘previous year’ with a uniform ‘tax year’, defined as 1st April 1 to 31st March.
- The Bill removes the restriction limiting refunds to on-time filed returns, allowing claims even for belatedly filed returns.
- The Bill clarifies there will be no Tax Collected at Source (TCS) on Liberalised Remittance Scheme (LRS) remittances for education purposes financed by financial institutions.
- Individuals with no tax liability can seek a nil Tax Deduction at Source certificate in advance.
- The applicability of the Alternate Minimum Tax (AMT) for Limited Liability Partnerships (LLPs) has been aligned with the existing provisions of the IT Act.
- AMT ensures that individuals benefiting from tax deductions and exemptions pay at least the minimum amount of tax.
Income Tax
- It is a direct tax on the income earned by individuals, companies, or other entities during a financial year. For individual taxpayers in India, it is levied according to progressive tax slabs.
- These slabs may vary under the new tax regime or with applicable rebates and deductions.
- According to the Central Board of Direct Taxes, India’s gross direct tax collections for 2025-26 stood at Rs 7.99 lakh crore, down 1.9% from Rs 8.14 lakh crore in FY 2024-25.
| Read more: Challenges and Reforms in India’s Taxation System |
