Govt withdraws Income-tax Bill 2025; new Bill to replace 1961 Act

News, dated 08-08-2025

Introduction of the Income-tax Bill, 2025

The Government of India had introduced the Income-tax Bill, 2025 in the Lok Sabha on 13 February 2025. On the very same day, the Bill was referred to the Select Committee for detailed examination and review. The Bill aimed to overhaul the existing income-tax framework and replace the Income-tax Act, 1961, bringing in a more modern, simplified, and clear legislative framework.

Review by the Select Committee

The Select Committee undertook a thorough evaluation of the Bill, engaging in consultations, expert reviews, and stakeholder discussions. After several months of deliberations, the Committee presented its report in the Lok Sabha on 21 July 2025. The Government accepted almost all of the recommendations put forward by the Committee, reflecting its commitment to incorporating expert and stakeholder feedback into the legislative process.

Need for Further Refinement

Following the Committee’s report, the Government also received certain additional suggestions from various stakeholders and policy experts. These inputs highlighted areas where the Bill could be further refined to ensure that the provisions clearly convey the intended meaning, reduce ambiguities, and align with the overarching objectives of tax reform. The Government acknowledged that these refinements were essential to make the law both robust and practically implementable.

Decision to Withdraw and Reintroduce

In light of the need for further changes, the Government has decided to withdraw the Income-tax Bill, 2025 as reported by the Select Committee. A revised version of the Bill, incorporating both the accepted recommendations and the additional suggestions, will be drafted and introduced in the Lok Sabha in due course. This new Bill will be positioned as a comprehensive replacement for the Income-tax Act, 1961, aiming to provide a clearer, fairer, and more efficient tax system.

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