Summary
Income Tax Bill 2025 Select Committee Summary offers clause‑wise clarity from Lok Sabha’s July 21, 2025 report: updated definitions, relief for taxpayers, streamlined processes and legal fixes. Learn what’s changing and how Efiletax can help you prepare and comply.
Introduction
Income Tax Bill 2025 Select Committee Summary clarifies major clause‑wise changes from the July 21, 2025 Lok Sabha report. This post explains what’s new, why it matters to Indian taxpayers, and how you can benefit using Efiletax—pain‑free and precise.
What the Select Committee Changed in the Income Tax Bill 2025
Updated Definitions (Keyphrase inclusion)
The committee revised definitions to match existing laws:
- Capital asset: aligned with FII/fund treatment.
- Infrastructure capital company: now self‑contained—no reference to repealed law.
- Micro & small enterprises: harmonised with MSMED Act definitions TaxTMI+11Taxscan+11Business Standard+11.
House Property Deductions
- Standard deduction (30%) now applies after municipal taxes.
- Pre‑construction interest allowed even for let‑out properties The Times of India+4Taxscan+4The Economic Times+4.
R&D & Employer Pension Clarity
- In‑house R&D deductions need clear clause articulation.
- Pension contributions: ambiguous wording removed to avoid uncertainty mint+3Taxscan+3A2ztaccorp+3.
Refunds & TDS Changes
- Clause 263(1)(ix) – TDS refund denial for late filers—deleted.
- Belated filers can now claim refunds without penalty mint+4TaxGuru+4The Economic Times+4.
Inter‑Corporate Dividend & NIL TDS Certificates
- Section 80M deduction for inter‑corporate dividends restored for 115BAA regime Taxonation+3TaxGuru+3Fortune India+3.
- NIL TDS certificates allowed, preventing blocked funds for NGOs or loss‑making entities TaxGuru.
Anti‑Avoidance & GAAR Safeguards
- Phrase “in the circumstances of the case” reinstated under GAAR.
- Prevents automatic, broad tax avoidance action mint+1Business Standard+1.
Non‑Profit & Trust Reliefs
- Income—not receipts—taxed for non‑profits.
- “Deemed application” rules retained.
- Anonymous donations to religious‑cum‑charitable trusts clarified The Times of India+3Taxscan+3Business Standard+3.
🌐 Procedural Modernisation
- Non‑resident liaison offices get 8 months (instead of 60 days) to file statements.
- Co‑op bank, valuer definitions clarified.
- Advance ruling fees simplified Taxscan+1mint+1.
Regulatory Continuity
- Clause 536 amended to preserve valid rules/circulars under the existing 1961 Act.
- Clean transition with no disruption Fortune India+2mint+2TaxGuru+2.
Comparison Table
| Area | Old Bill | Select Committee Change |
|---|---|---|
| Belated refund | Denied via Clause 263(1)(ix) | Clause deleted – refunds allowed |
| 80M deduction | 115BAA regime excluded | Reinstated for inter‑corporate dividends |
| Nil TDS certificate | Not allowed | Committee approved |
| GAAR phrase | Omitted | “Circumstances of the case” reinstated |
Expert Insight
Gauri Puri, Shardul Amarchand Mangaldas:
“Parliamentary Committee stayed true to textual simplification… correcting drafting errors and removing ambiguities” Wikipedia+4TaxGuru+4The Economic Times+4Wikipedia+8Fortune India+8TaxGuru+8mint+1Business Standard+1
Efiletax tip: Use our in‑built clause reference tool to track changes like these and act fast.
Why It Matters to You
- Clarity in compliance: Definitions and term consistency reduce legal disputes.
- Cash‑flow relief: Refunds and TDS changes ensure timely claims.
- NGO & business advantages: Nil‑TDS and pension deductions ease operations.
- Transition ease: Valid circulars remain effective automatically.
Action Checklist
- Review property’s municipal tax report for post-deduction standard allowance.
- NGOs/businesses to apply for NIL TDS certificates now available.
- Employer pension contributions: adjust ITR submissions.
- Use Efiletax’s clause tracker to update your compliance dashboards.
FAQ
Q1: When will these changes apply?
Once accepted by the Finance Ministry and passed by Parliament, likely effective 1 April 2026 The Economic TimesThe Times of India+3Taxscan+3The Economic Times+3.
Q2: Will GAAR apply selectively?
Yes—reinstated “in the circumstances of the case” ensures more taxpayer protection.
Q3: Who qualifies for NIL TDS?
Loss‑making entities, NGOs, religious trusts—all can now apply with proper certificate.
Conclusion & CTA
The Income Tax Bill 2025 Select Committee Summary brings clarity and taxpayer relief. Efiletax is fully updated with these clause-level changes. Watch our blog for full commentary and prepare your returns confidently.