{"id":48890,"date":"2025-07-22T20:55:40","date_gmt":"2025-07-22T15:25:40","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=48890"},"modified":"2025-07-25T15:32:47","modified_gmt":"2025-07-25T10:02:47","slug":"parliamentary-panel-on-income-tax-bill-provisions","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/22-07-2025\/parliamentary-panel-on-income-tax-bill-provisions","title":{"rendered":"Parliamentary Panel on Income Tax Bill Provisions"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Governance; Government Policy &amp; Intervention; GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recently, the <strong>Select Committee of Parliament (31-Member)<\/strong> tabled its report on the <strong>new Income Tax Bill, 2025<\/strong> in the Lok Sabha.\n<ul class=\"wp-block-list\">\n<li>The <strong>&nbsp;Income Tax Bill, 2025<\/strong> seeks <strong>to replace the Income Tax Act of 1961<\/strong>, aims to simplify tax laws, reduce litigation, and enhance taxpayer clarity.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Recommendations of the Parliamentary Panel<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>TDS Refunds:<\/strong> Proposed removal of strict penalty clauses against late refund claims when the taxpayer is otherwise compliant.<\/li>\n\n\n\n<li><strong>Trust Taxation:<\/strong> Relief for religious-cum-charitable trusts from flat 30% tax on anonymous donations.<\/li>\n\n\n\n<li><strong>GAAR Safeguards:<\/strong> Supports restoration of zero-tax withholding certificates for non-residents, facilitating smoother cross-border compliance.<\/li>\n\n\n\n<li><strong>Beneficial Ownership:<\/strong> Clearer definitions to avoid ambiguity in corporate taxation.<\/li>\n\n\n\n<li><strong>Discretion on Penalties: <\/strong>Recommends making penalties for non-maintenance of account books discretionary, not automatic, to avoid punishing honest mistakes by genuine taxpayers.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Features of the Income Tax Bill, 2025<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Tax Year Concept:<\/strong> Replaces \u2018Assessment Year\u2019 with a uniform \u2018Tax Year\u2019 aligned to the financial year (April 1\u2013March 31).<\/li>\n\n\n\n<li><strong>Digital Asset Taxation:<\/strong> <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-03-2025\/taxing-virtual-digital-assets\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-03-2025\/taxing-virtual-digital-assets\"><strong>Virtual Digital Assets (VDAs)<\/strong><\/a> like crypto and NFTs classified as capital assets, subject to capital gains tax.<\/li>\n\n\n\n<li><strong>Simplified Drafting:<\/strong> Dense legal language replaced with concise clauses, tables, and schedules for better readability.<\/li>\n\n\n\n<li><strong>Presumptive Taxation Limits:<\/strong> Thresholds raised for small businesses (\u20b92 crore to \u20b93 crore) and professionals (\u20b950 lakh to \u20b975 lakh).<\/li>\n\n\n\n<li><strong>Faceless Appeals:<\/strong> Mandatory video hearings and second-level review panels introduced to strengthen natural justice.<\/li>\n\n\n\n<li><strong>Search &amp; Seizure Powers:<\/strong> Tax officials can override passwords and access digital platforms like emails and social media.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact on Taxpayers<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Salaried Individuals:<\/strong> Minimal changes; improved filing interface<\/li>\n\n\n\n<li><strong>Small Businesses:<\/strong> Easier compliance via higher presumptive limits<\/li>\n\n\n\n<li><strong>Crypto Traders:<\/strong> Clearer tax treatment of digital assets<\/li>\n\n\n\n<li><strong>Startups &amp; Freelancers:<\/strong> Eligible for simplified presumptive taxation<\/li>\n\n\n\n<li><strong>Tax Professionals:<\/strong> Need to update SOPs and retrain on new definitions<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Issues of the Bill<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Privacy Concerns:<\/strong> The bill lacks judicial oversight or warrant requirements for accessing personal digital data.\n<ul class=\"wp-block-list\">\n<li>It may violate the <strong>Right to Privacy<\/strong>, upheld by the Supreme Court in <strong>Justice K.S. Puttaswamy v. Union of India<\/strong>.<\/li>\n\n\n\n<li>The <strong>open-ended definition of digital space<\/strong> could lead to overreach, exposing unrelated personal information.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Overriding Power:<\/strong> Under <strong>Section 247 of Bill<\/strong>, tax authorities are empowered to access digital platforms like emails, social media, cloud servers, and online trading accounts; override passwords and encryption if access credentials are not provided;\n<ul class=\"wp-block-list\">\n<li>The bill defines <strong>\u2018virtual digital space\u2019<\/strong> broadly, covering nearly all online environments where financial or personal data may reside.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Legal Ambiguities:<\/strong> Despite structural simplification, many undefined terms (e.g., \u2018risk management strategy\u2019) remain, risking increased litigation.\n<ul class=\"wp-block-list\">\n<li>Some definitions still reference the 1961 Act, undermining the goal of a self-contained statute.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Compliance Burden:<\/strong> While the Bill is shorter in word count, the core tax architecture remains unchanged, offering little relief to small taxpayers.\n<ul class=\"wp-block-list\">\n<li>Refunds for excess TDS still require manual follow-up; no provision for automatic system-driven refunds.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Judicial Delays:<\/strong> Appeals timelines remain discretionary (\u201cmay\u201d dispose within a year), perpetuating delays of 4\u20135 years.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\u2019s Next?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Following the tabling of the report in Parliament, the <strong>Lok Sabha will deliberate<\/strong> on the Committee\u2019s recommendations and proceed toward the Bill\u2019s <strong>finalisation and enactment<\/strong>.<\/li>\n\n\n\n<li>If approved, the new law is expected to come into force on April 1, 2026.<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/www.thehindu.com\/news\/national\/parliamentary-panel-report-on-new-income-tax-bill-2025-to-be-tabled-in-lok-sabha-on-july-21\/article69833925.ece\" rel=\"nofollow noopener\" target=\"_blank\">Source: TH<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">Recently, the Select Committee of Parliament (31-Member) tabled its report on the new Income Tax Bill, 2025 in the Lok Sabha.<\/li>\n<p><\/p>\n<h3><strong>Key Recommendations of the Parliamentary Panel<\/strong><\/h3>\n<li class=\"ms-5\">TDS Refunds: Proposed removal of strict penalty clauses against late refund claims when the taxpayer is otherwise compliant.<\/li>\n<li class=\"ms-5\">Trust Taxation: Relief for religious-cum-charitable trusts from flat 30% tax on anonymous donations.<\/li>\n<li class=\"ms-5\">GAAR Safeguards: Supports restoration of zero-tax withholding certificates for non-residents, facilitating smoother cross-border compliance.<\/li>\n<li class=\"ms-5\">Beneficial Ownership: Clearer definitions to avoid ambiguity in corporate taxation.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/22-07-2025\/parliamentary-panel-on-income-tax-bill-provisions\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-48890","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/48890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=48890"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/48890\/revisions"}],"predecessor-version":[{"id":49191,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/48890\/revisions\/49191"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=48890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=48890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=48890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}