The Lok Sabha has passed the revised Income-Tax (No. 2) Bill, 2025, just days after withdrawing the earlier draft introduced in February this year. The original bill, tabled on 13 February 2025 as a replacement for the Income-Tax Act of 1961, was withdrawn on 8 August 2025 following feedback from the Parliamentary Select Committee and public stakeholders. Concerns included inconsistencies, ambiguous phrasing, and cross-referencing errors, which prompted a thorough redrafting process.
The Select Committee, chaired by MP Baijayant Panda, submitted a detailed report containing 285 recommendations aimed at simplifying legal language, improving structural coherence, aligning definitions, and enhancing fairness and clarity. Acting on these suggestions, Finance Minister Nirmala Sitharaman reintroduced a significantly refined draft on 11 August 2025. This version incorporated nearly all committee recommendations and was passed in the Lok Sabha by voice vote during a session marked by minimal debate.
The revised bill maintains the core structure and policy features of the original draft but introduces a more streamlined and user-friendly framework. Structural changes include reducing sections from 819 to 536, consolidating chapters to 23, and embedding a digital-first, faceless assessment system to enhance efficiency. Key provisions retained are the ₹12 lakh annual exemption threshold, timely tax refunds even after filing deadlines, restrictions on anonymous donations, and the requirement for prior notice before enforcement action.
With its focus on clarity, compliance ease, and modernization, the bill is positioned as a major overhaul of India’s tax law after more than six decades. It now moves to the Rajya Sabha for deliberation before becoming law, potentially setting the stage for a simpler, fairer, and tech-enabled tax regime in the country.