Taxation Laws (Amendment) Bill 2025 | Key Income Tax Changes
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- 2 Min Read
- By Taxmann
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- Last Updated on 12 August, 2025
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Taxmann Advisory and Research Team (Income Tax)
1. Introduction to the Amendment Bill
On August 11, 2025, the Lok Sabha passed the Taxation Laws (Amendment) Bill, 2025, which makes targeted changes to the Income-tax Act, 1961 (ITA) and the Finance Act, 2025. The primary aim of the Bill is to extend specific tax benefits, address procedural matters, and rectify certain errors in the Finance Act, 2025. These amendments have both individual and institutional tax implications, aligning tax provisions with recent policy measures.
2. Tax Benefits for Unified Pension Scheme Subscribers
One of the key provisions in the Amendment Bill is the extension of tax benefits to subscribers of the Unified Pension Scheme introduced in 2025. This move is designed to incentivise participation in the scheme, providing individuals with retirement security while reducing their overall tax burden. The inclusion of this benefit aligns pension savings with existing tax-efficient investment options.
3. Procedural and Compliance Changes
The Bill also introduces procedural reforms. It specifies that any proceedings for the block period initiated after a search will automatically stand abated, reducing prolonged litigation and compliance uncertainty. Additionally, the standard deduction of ₹75,000—previously available only under the old tax regime—will now be extended to taxpayers opting for the new tax regime, starting from Assessment Year 2026-27. This extension ensures a level playing field and encourages adoption of the simplified tax structure.
4. Institutional Tax Exemptions
Further, the benefit of the Section 10(23FE) exemption—available for certain specified investment funds—has now been extended to the Public Investment Fund of Saudi Arabia. This change is aimed at enhancing foreign investment inflows, particularly from sovereign funds, and strengthening India’s international investment partnerships.
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