Parliamentary Panel Reviews New I-T Bill, Pushes For Key Recommendations
Meanwhile, the panel, headed by BJP’s senior member Baijayant Panda, also tabled its report with new suggestions in the Lower House.
New Delhi:A Parliamentary panel, which looked into the new Income Tax (I-T) Bill minutely, on Monday suggested that the finance ministry should allow several key recommendations, including individual taxpayers’ claim on tax deducted at source or TDS refunds by filing I-T returns after the due date without penalty, and exempt anonymous donations made to religious-cum-charitable trusts from taxation.
The committee has recommended changes in the I-T Bill, 2025, which will replace the six-decade-old Income Tax Act, 1961. Meanwhile, the panel, headed by BJP’s senior member Baijayant Panda, also tabled its report with new suggestions in the Lower House.
The panel also suggested that the ambiguity with regard to Non-Profit Organisations (NPOs), especially those with mixed charitable and religious objectives, for taxing anonymous donations should be removed. However, it also opposed taxing ‘receipts’ of NPOs as it contravenes the principle of real income taxation under the Income Tax Act. It also recommended reintroducing the term income to ensure only net income of NPOs is taxed.
“While the Bill's stated aim is textual simplification, the committee observed a critical omission concerning religious-cum-charitable trusts, which could have substantial adverse impacts on a large segment of India's NPO sector. The Clause 337 of the Income Tax Bill, 2025, also proposed a flat 30 per cent tax on anonymous donations received by all registered NPOs, with a narrow exemption extended only to those established wholly for religious purposes,” the report noted.
This marks a stark departure from the current Section 115BBC of the Income-tax Act, 1961. The existing law provided a more comprehensive exemption: anonymous donations were not taxed if received by any trust or institution created or established wholly for religious and charitable purposes, unless such a donation was specifically directed towards a university, educational institution, hospital, or medical institution run by that same trust or institution.
The existing provision legitimately recognises these "religious-cum-charitable" entities as a distinct and valid class eligible for concessions on anonymous donations, understanding that such organisations often receive contributions through traditional means like donation boxes, where donor identification is practically impossible. “The committee strongly urge the reintroduction of a provision analogous to the explanation found in Section 115BBC of the 1961 Act,” the report said.
On TDS claim, the committee also observed that the current mandatory requirement to file a return solely for the purpose of claiming a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source. “In such scenarios, the law should not compel a return merely to avoid penal provisions for non-filing. The committee, therefore, recommended removing sub-clause (1)(ix) from Clause 263 to provide flexibility for allowing refund claims in cases where the return is not filed in due time,” it noted.
