Select Committee submits report on Income Tax Bill, 2025; seeks key edits
New Delhi, Jul 21, 2025
A panel of 31 Lok Sabha members, led by Baijayant Panda suggested over 30 changes to ensure clarity, fairness, and alignment with existing laws in the proposed Income Tax Bill, 2025
The Select Committee of the Lok Sabha, led by chairperson Baijayant Panda of the Bharatiya Janata Party, submitted its detailed report on the Income Tax Bill, 2025, in Parliament on Monday. The Bill was introduced on February 13 by Finance Minister Nirmala Sitharaman.
The committee, which includes 31 Lok Sabha members, was tasked with examining the Bill and suggesting improvements. It submitted its report on the first day of the Monsoon Session as scheduled.
Key recommendations from the committee
Updating definitions: The Select Committee recommends changes in several definitions such as “capital asset”, “infrastructure capital company”, and “micro and small enterprises” to bring them in line with current laws. The aim is to make the law more self-contained and easier to interpret.
Relief for homeowners and taxpayers: To improve fairness for property owners, the committee suggested changes to how deductions for house property income are calculated. It also recommended that people be allowed to carry forward losses even if there are temporary changes in shareholding, as long as continuity is later restored.
Support for businesses and startups: The committee pushed for clearer rules on R&D deductions, suggested tax breaks for businesses handling biodegradable waste, and asked for more clarity around the definition of “parent company” and “status” in tax appeals.
Focus on fairness and reducing litigation
Protecting taxpayers’ rights: The committee advised reintroducing the phrase “in the circumstances of the case” in rules around tax avoidance.
Better rules for non-profits: Several suggestions were made to protect religious and charitable trusts. This included imposing 30 per cent tax on anonymous donations and exempting wholly religious trusts. It also included retaining provisions for “deemed application” of income — crucial for organisations that receive delayed funds.
Flexibility for small taxpayers: For concerns around compulsory filing of returns for refunds, the Select Committee recommended removing this requirement for those with incomes below the taxable limit, especially if tax has already been deducted.
[The Business Standard]
