New Income Tax Bill 2025: Key Changes In Legislation For Taxpayers, Investors, Pensioners, Property Owners

Union Finance Minister Nirmala Sitharaman on Monday tabled the new Income Tax Bill 2025 in Lok Sabha.

The new legislation is the revised version, incorporating most recommendations of the Select Committee chaired by Baijayant Panda. The government has accepted the majority of the suggestions submitted by the panel, which conducted a detailed review of the draft legislation.

Here are some of the changes in the bill:

• The new bill seeks to amend Section 10 of the Income Tax Act, 1961.

• The amendment proposes tax exemption for the Public Investment Fund of Saudi Arabia Kingdom and its subsidiaries.

• The new bill also aims to provide exemption for certain subscribers of the Unified Pension Scheme rolled out in 2025.

• It also proposes changes in Block Assessment provisions under the Income Tax Act, 1961.

• Adverse Alternative Minimum Tax proposal dropped in the latest version of the Income-tax Amendment Bill, 2025.

• The new bill maintains status quo on loss carry forward rules under Section 79.

• The legislation also introduces a key amendment on Associated Enterprise shareholding threshold.

• The proposal for no penalty on late TDS filing has been incorporated.

• A clause that blocked refunds if returns were filed late has been deleted. This will allow genuine cases with issues like technical issues to be considered.

• The new bill in order to have better clarity on property valuation will no longer have the term 'in normal course'. This will help avoid disputes with taxation being based on higher of actual or deemed rent.

• The amendment will have clearer deduction rules. According to the new bill, 30% deduction will be applicable after municipal taxes.

• In addition, pre-construction interest deduction will also be allowed for both self-occupied and let-out properties.

• The amendment also includes the adjustment of wording in a way to avoid taxing temporarily unused business premises on notional rent.

• In the new bill, Clause 20 confirms that the income from building and associated land will be taxed under income from house property unless the property is being used for professional purposes.

• Clause 21 clarifies that the annual value of the property will be higher than the notional rent or the actual rent received with the local taxes being reduced.