The government has officially withdrawn the earlier version of the Income Tax Bill, 2025, which was introduced in Parliament on February 13 to replace the old Income-Tax Act of 1961. A fresh and updated version of this bill will now be introduced in the Lok Sabha on Monday, August 11.

This decision was taken after a Select Committee, headed by MP Baijayant Panda, submitted a massive 4,500-page report with 285 suggestions to improve the bill. The committee reviewed the draft carefully and made recommendations to simplify the law and make it more taxpayer-friendly.

Key suggestions by the committee

Clearer rules for income from house property

The current law allows a 30% standard deduction on income earned from house property (after subtracting municipal taxes), but this rule is not written in the new draft. The committee has suggested that this deduction be mentioned in the new law to avoid any confusion for taxpayers.

Home loan interest deduction for rented houses

As of now, only people living in their own homes can claim tax benefits on home loan interest.The committee has recommended that this benefit be extended to people who rent out their properties, too.This would be a big relief for many middle-class families and property owners.

Faster and smoother refunds for TDS and TCS

Many taxpayers face long delays in getting refunds for the tax deducted or collected at source (TDS/TCS). The committee has suggested that the refund process should be quicker, easier, and more transparent, so people don’t have to wait endlessly for their own money.

Friendlier tax enforcement

The Central Board of Direct Taxes (CBDT) has said that new tax rules are being prepared under a policy called “Enforcement with Empathy.” This means the government wants to take a softer, more supportive approach, especially for honest taxpayers, by reducing unnecessary hassles and paperwork.

The new version of the Income-Tax Bill will include most of these suggestions and will be presented in Parliament for discussion and approval. If passed, it could bring major changes in how we file and pay taxes in the future, hopefully making the process easier and more transparent for everyone.