From extending dividend deductions to companies under the new tax regime to giving clarity on the tax treatment of partnership firms and easing compliance for taxpayers, the New Income Tax Bill attempts to address long-standing complexities in the decades old direct tax laws, according to CBDT sources.
It also incorporates key changes from recent finance legislations, streamlining various provisions for better administration and fewer disputes.
Let's have a look at the major changes:
80M Deduction for Companies in New Regime: Companies that have opted for the new concessional tax regime can now also claim deductions under Section 80M for dividends received from other companies.
Relief for Families — Pension & Gratuity: Deductions for commuted pension and gratuity received by family members are now clearly defined under the new law.
MAT and AMT Separated: The provisions of Minimum Alternate Tax and Alternate Minimum Tax are now clearly separated under two sub-sections, helping avoid confusion.
AMT Applies Only Where Deductions Are Claimed: Non-corporate taxpayers, including LLPs, will only be subject to AMT if they claim certain deductions. LLPs with only capital gains income (and no deductions) are not liable.
Professionals Must Use Digital Payments: The term “profession” has been added alongside “business” under electronic payment rules. This means professionals with receipts over Rs 50 crore annually must use prescribed electronic modes of payment.
Refunds Allowed Even if Return Filed Late: Taxpayers who miss the ITR filing deadline may still be allowed to claim refunds, thanks to the removal of a restrictive clause.
Clearer Rules on Losses: While the rules for carry forward and set-off of losses remain the same in essence, they’ve been re-drafted for clarity.
Shift from “Receipts” to “Income”: The Bill focuses on income-based taxation, moving away from the concept of ‘receipts’—bringing it back in line with the older 1961 Act.
Changes Impacting Non-Profit Organisations
Capital Gains Used for Assets Treated as Income Use: When NGOs use capital gains to acquire new assets, it will continue to be treated as application of income.
Income Received Late Can Be Counted Later: If NGOs fail to use 85% of their income due to late receipts, they can treat it as applied in the year it’s actually received.
Anonymous Donations Rule Simplified: The rules on taxing anonymous donations have been aligned with existing provisions and now apply to multi-object NGOs as well.
Clear Definition of Multi-Object NGOs: The new bill clearly defines “mixed object” registered non-profits, which was previously ambiguous.
No Need to Invest 15% Accumulated Income: The mandatory requirement to invest 15% of unspent income in specified instruments has been removed, easing compliance for NGOs.
Easing Procedures
TDS Correction Period Reduced: Time to file correction statements for TDS has been reduced from 6 years to 2 years, likely reducing delays and disputes.
Amendments made through the Finance Act, 2025 and Taxation Laws (Amendment) Bill, 2025 have been incorporated into the new Bill for consistency.
RECOMMENDED FOR YOU
New Income Tax Bill 2025: Finance Minister Nirmala Sitharaman Tables Bill In Lok Sabha
Aug 11, 2025
Fresh Version Of Income-Tax Bill Coming: What Taxpayers Can Expect
Aug 10, 2025
Finding It Difficult To File ITR For FY25: Seven Steps To Make It Easy For You
Jul 25, 2025
Govt May Bring Back Dividend Deduction In Overhauled Income tax Bill
Jul 19, 2025
POPULAR