The transfer follows the federal government's determination final week to withdraw the Revenue-Tax Invoice, 2025, which was introduced on February 13 to exchange the six-decade-old Revenue-Tax Act, 1961. The brand new draft, tabled on August 11, goals to supply lawmakers with a single, up to date model that displays all instructed adjustments.
Explaining the withdrawal in Parliament, Sitharaman stated, “Options have been acquired that are required to be integrated to convey the proper legislative which means. There are corrections within the nature of drafting, alignment of phrases, consequential adjustments and cross-referencing.” She added that the sooner Invoice was pulled again to keep away from confusion and that the contemporary draft will function the idea for changing the 1961 Act.
Key suggestions by the Choose Committee
The parliamentary panel had flagged a number of drafting errors and instructed amendments to scale back ambiguity:
Clause 21 (Annual worth of property): Take away the time period “in regular course” and add a transparent comparability between precise lease and “deemed lease” for vacant properties.
Clause 22 (Deductions from home property earnings): Specify that the 30% commonplace deduction applies after deducting municipal taxes; lengthen pre-construction curiosity deduction to let-out properties.
Clause 19 (Wage deductions – Schedule VII): Permit commuted pension deductions for non-employees receiving pensions from a fund.
Clause 20 (Business property): Modify wording to keep away from taxing quickly unused enterprise properties as “home property” earnings.The Committee stated these adjustments would enhance equity and readability whereas aligning the legislation with current provisions.Provisions within the withdrawn Invoice
The February draft was described as probably the most important reform of India's direct tax code in over 60 years. Key options included:
Simplified language, consolidation of deductions, and shorter provisions to ease compliance.
Decrease penalties for sure offences to make the system extra taxpayer-friendly.
No change in tax slabs, capital positive aspects guidelines, or earnings classes.
Discount in litigation by means of a “belief first, scrutinise later” strategy.
Fashionable administration with enhanced CBDT powers, digital monitoring, and the introduction of a “tax 12 months” idea.
The sooner draft had 23 chapters, 536 sections, and 16 schedules, utilizing tables and formulation for simpler interpretation. It additionally proposed streamlined TDS guidelines, simplified depreciation provisions, and retention of residency standards and monetary 12 months timelines.
