House Panel Report on New I-T Bill: Here Are the 5 Key Takeaways for Individual Taxpayers
The Select Committee of the Lok Sabha, chaired by Baijayant Panda, submitted its report on the Income Tax Bill, 2025, recommending significant amendments aimed at simplifying tax laws and addressing concerns of individual taxpayers. The bill proposes to replace the Income Tax Act, 1961, and seeks to modernize India’s tax framework. Below are the five key takeaways for individual taxpayers from the House panel’s report:
1. Refunds Allowed Even for Late Return Filers
One of the most taxpayer-friendly recommendations is the removal of restrictions that disallowed refunds for those who file their returns belatedly. The committee recommended deleting the clause that prevented taxpayers from claiming refunds if returns were not filed on time, thus providing flexibility for late filers to receive refunds without penalties or loss of claims.
2. Clarification and Relief on Deductions from House Property Income
The panel suggested refining deductions related to house property income to make the rules clearer and fairer for homeowners. This includes revising how losses and income are calculated from house property to benefit taxpayers in property holding and improve fairness in the tax treatment.
3. Exemption from Mandatory Filing for Small Taxpayers to Claim Refunds
The committee recommended exempting small taxpayers, specifically those having income below taxable limits but subject to TDS (Tax Deducted at Source), from the mandatory requirement of filing income tax returns solely for claiming refunds. This is aimed at easing compliance for small earners while ensuring they can still claim their rightful refunds without unnecessary penalty risks.
4. Alignment and Simplification of Definitions
To ease interpretation and reduce confusion, the committee proposed updating key definitions in the bill such as "capital asset," "infrastructure capital company," and "micro and small enterprises". This harmonization seeks to make the Income Tax Bill more coherent and self-contained while aligning it with existing tax laws.
5. Retention of Search and Seizure Provisions with Minor Drafting Changes
Despite privacy concerns raised by several stakeholders, the panel recommended retaining the existing search and seizure powers in the new bill, similar to the current Income Tax Act. Minor editorial corrections were suggested, but the fundamental provisions empowering digital and physical searches remain intact to support tax enforcement.
Frequently Asked Questions
Is it now easier to get refunds if I file my tax return late?
Yes, the committee has recommended that taxpayers should be able to claim refunds even if they file returns after the due date, removing previous barriers to late refund claims.
Will small taxpayers have to file returns just to claim TDS refunds?
No, the committee proposes exempting small taxpayers from mandatory filing of returns solely for refund claims, simplifying compliance for those with income below taxable limits.
What changes are being made about house property income tax?
The panel suggests clearer rules on how deductions and losses on house property income are calculated to offer fairer tax treatment to property owners.
Does the new bill reduce privacy protections in tax enforcement?
The report retains the current provisions on search and seizure, including powers over digital assets, balancing enforcement needs with existing privacy safeguards.
When will the new Income Tax Bill 2025 come into effect?
The bill is proposed to commence from April 1, 2026, pending final parliamentary approval
Published on: July 22, 2025
Published by: PAVAN
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