The government has withdrawn the Income-Tax Bill, 2025, and plans to present a revised draft in the Lok Sabha on August 11, reflecting key recommendations from a parliamentary committee
The proposed legislation is intended to replace the Income-Tax Act, 1961, which mainly covers inspection of physical and manual financial records
The updated bill would give tax officers enhanced powers to access and examine digital platforms, online accounts, and cloud-based data during search and seizure operations
The Income-Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the existing Income-Tax Act, 1961, has been formally withdrawn, said people familiar with the matter.
The new version of the Income Tax Bill, incorporating most of the recommendations made by the Select Committee chaired by Baijayant Panda, will be introduced on Monday, August 11.
The 1961 Income Tax Act permits the examination of books of account, physically kept or every manual record, which shows income expenditure.
However, the new bill gives tax officers powers to override the access code of computer systems and virtual digital space, including online trading and investment accounts as well as cloud servers, in search and seizure cases.
As per the Bill, virtual digital space encompasses any digital realm that allows users to interact, communicate and perform activities using computer systems, computer networks, and communication devices, and includes email servers, social media accounts, online investment accounts, trading accounts, banking account, etc; any website used for storing details of ownership of any asset; remote server or cloud servers; and digital application platforms.
The simplified Income Tax Bill, which is half the size of the 1961 Income Tax Act, seeks to achieve tax certainty by minimising the scope of litigation and fresh interpretation, the Income Tax department had earlier said.
In July, a Parliamentary panel, which examined the new Income Tax Bill, has suggested that the finance ministry should allow individual taxpayers to claim TDS refunds by filing I-T returns after the due date without penalty, and exempt anonymous donations made to religious-cum-charitable trusts from taxation.
The Committee has recommended changes in the Income Tax Bill, 2025, which will replace the six-decade-old Income Tax Act, 1961.
The panel also suggested that the ambiguity with regard to Non-Profit Organisations (NPOs), especially those with mixed charitable and religious objectives, for taxing anonymous donations should be removed.
It even opposed taxing 'receipts' of NPOs as it contravenes the principle of real income taxation under the Income Tax Act, and recommended reintroducing the term 'income' to ensure only net income of NPOs is taxed.
