The Income Tax Bill 2025 may replace the old tax law from next year. Know what changes are expected, including refund rules, TDS certificates, and Section 80M benefits.
If you missed the deadline to file your Income Tax Return (ITR), don’t worry—you might still be eligible for a tax refund soon. A major Parliamentary Committee has recommended big changes to the new Income Tax Bill 2025, aiming to make the tax system more fair and accessible to ordinary citizens, religious institutions, and small businesses.
Currently, the draft bill doesn’t allow refunds for late ITR filings. However, the committee wants to change that and introduce more taxpayer-friendly provisions. Here’s a breakdown of the proposed changes:
Key Changes Suggested in the New Income Tax Bill 2025
1. Refunds Even After Late Filing
One of the biggest recommendations is that tax refunds should still be allowed even if the ITR is filed after the deadline. This could benefit thousands who miss the due date but still deserve their refund.
2. Zero TDS for Low-Income Individuals
Many low-income earners still face TDS (Tax Deducted at Source) deductions despite having no tax liability. The committee suggests:
- A simple refund form for such individuals.
- Issuance of “Zero TDS Certificates” so that tax is not deducted at all for people with little or no taxable income.
3. No Tax on Anonymous Donations to Religious Institutions
Temples, mosques, gurudwaras, and charitable trusts often receive anonymous donations (like money put in donation boxes). The committee says such donations should not be taxed, as they are not “income” but voluntary contributions from the public.
4. Dividend Exemption for Companies
In the older tax regime, companies were allowed to avoid tax on dividends received from other companies. The committee recommends bringing back this benefit in the new bill. This move will encourage inter-corporate investments and reduce tax burdens on businesses.
5. More Tax Relief for Homeowners
- If you’ve rented out your house and paid municipal taxes, you’ll be eligible for a full deduction.
- If you’ve taken a home loan for construction, you’ll be able to claim interest deductions, whether or not the house is rented yet.
Boost for MSMEs and Startups
The committee also wants to:
- Simplify the definition of MSMEs (Micro, Small, and Medium Enterprises) for tax purposes.
- Offer special tax benefits to startups, especially for those investing in research and development (R&D).
- Promote scientific research through tailor-made tax rules.
Why Are These Changes Being Recommended?
This set of recommendations comes from a Lok Sabha Committee chaired by BJP MP Baijayant Panda. While the Income Tax Bill 2025 aims to simplify India’s tax code, the committee pointed out that the draft did not fully consider the needs of the common man, religious institutions, or small businesses.
To address these gaps, the committee compiled a 4584-page report covering 32 key issues, urging the government to make the tax code more inclusive and practical.
Now, it’s up to the Finance Ministry to decide which of these suggestions will be included in the final version of the bill.
Summary of Key Recommendations
| Area | Suggested Change |
|---|---|
| ITR Refunds | Allow refunds even if returns are filed late |
| TDS Deduction | Introduce Zero TDS certificates for low-income taxpayers |
| Religious Donations | Exempt anonymous donations from tax |
| Corporate Tax | Reinstate dividend tax exemption for companies |
| Homeowners | Full deduction of municipal tax and home loan interest |
| MSMEs & Startups | Simplify definitions, provide R&D tax relief, support scientific innovation |
Final Thoughts
The Income Tax Bill 2025 could bring meaningful changes for taxpayers if these recommendations are accepted. Whether you’re a salaried employee, a homeowner, a religious trust, or a startup founder, these reforms aim to reduce complexity, improve fairness, and make the tax system more people-centric.
Keep an eye on Parliament’s upcoming sessions—your tax benefits for next year may depend on it.
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