Bill also proposes changes in block assessment rules and tax perks for Saudi public investment funds
New Delhi: Advancing one step closure to make the new revised Income-Tax (I-T) Bill a reality in the country, the Lok Sabha on Monday passed two important legislations pertaining to taxation — Income-Tax (No 2) Bill and Taxation Laws (Amendment) Bill amid vociferous protest by members of Opposition over revision of electoral rolls in Bihar.
The updated bill — Income-Tax (No 2) Bill, presented by Union finance minister Nirmala Sitharaman on August 11, incorporates most of the recommendations made by the select committee, headed by senior BJP member Baijayant Panda. The new bill, designed to update and simplify India’s taxation system, however, seeks to consolidate and amend the law relating to Income Tax Act 1961 and aims to replace the six-decade-old income tax laws in the country.
The proposal in the new I-T bill has included a revised structure, provisions for digital taxation, systems for resolving disputes, and initiatives to expand tax collection through technological and data-driven methods. The other legislation — the Taxation Laws (Amendment) Bill, 2025, will also amend the Income-tax Act, 1961 as well as the Finance Act, 2025. It aims to provide tax exemptions to subscribers of the unified pension scheme.
Initially, Sitharaman introduced these two key bills in the lower house earlier in the day. “Almost all of the recommendations of the select committee have been accepted by the government. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately,” said the statement of objects and reasons of the Income-Tax (No.2) Bill, 2025.
The select committee had suggested a host of changes in the I-T Bill, 2025, which was introduced in the Lok Sabha on February 13. “There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing. Therefore, a decision has been taken by the government to withdraw the Income-tax Bill, 2025 as reported by the Select Committee. Consequently, Income-tax (No. 2) Bill, 2025 has been prepared to replace the Income-tax Act, 1961,” the statement said.
The Taxation Laws (Amendment) Bill, 2025, also passed by voice vote in the Lok Sabha, incorporated changes in the scheme of block assessment with regard to Income Tax search cases, and would provide for certain direct tax benefits to public investment funds of Saudi Arabia. It seeks to amend the Income-tax Act, 1961 and also the Finance Act, 2025.
The government in July announced that all tax benefits available under the New Pension Scheme (NPS) shall apply to the Unified Pension Scheme (UPS), which was implemented from April 1, 2025.
