New Income Tax Bill 2025: What the Latest Proposals Mean for Taxpayers and Trusts in India
The Indian tax system is on the brink of a historic transformation. The New Income Tax Bill, 2025 aims to replace the six-decade-old Income Tax Act of 1961 with a more modern and taxpayer-friendly law. The latest report by the Parliamentary Select Committee, chaired by BJP MP Baijayant Panda, has proposed several changes that could impact individual taxpayers, small earners, and charitable organizations across the country.
Here’s a detailed breakdown of the major recommendations and their implications:
💸 TDS Refund After Due Date – A Big Relief for Small Taxpayers
One of the most impactful suggestions by the panel is to allow refund of TDS (Tax Deducted at Source) even after the due date of filing returns.
✅ Why This Matters
Currently, if an individual misses the ITR filing deadline, any TDS deducted is considered forfeited unless legal remedies are pursued. This disproportionately affects low-income earners, pensioners, and freelancers whose income falls below the taxable limit but still have TDS deducted.
The Parliamentary Committee has recommended:
Removing Clause 263(1)(ix), which penalizes taxpayers for missing the return deadline.
Allowing TDS refunds beyond the ITR due date, especially when the individual’s total income is below the basic exemption limit.
This could help lakhs of small taxpayers recover their hard-earned money without facing procedural roadblocks or penalties.
🏛️ Controversy Over Trust Taxation – Clause 337 Draws Fire
Another major area of concern in the New Income Tax Bill is Clause 337, which proposes that all registered trusts and NPOs (Non-Profit Organisations) will face a flat 30% tax on any anonymous donations they receive.
📌 What’s the Current Rule?
As per existing laws:
Only purely religious trusts are exempt from taxation on anonymous donations under Section 115BBC.
🔄 Proposed Change:
The new clause removes this relief for trusts that are both religious and charitable in nature.
This would lead to significant tax burden on NGOs, educational institutions, and hybrid trusts working for social welfare.
📢 What the Panel Suggests:
The Parliamentary Committee has recommended:
Revisiting Clause 337 to exclude hybrid trusts (religious + charitable) from this harsh provision.
Offering clarity on anonymous donations and defining what constitutes “genuine charitable giving” to prevent misuse without penalizing legitimate organizations.
📘 Why the Income Tax Law is Being Revamped
The current Income Tax Act, 1961, has undergone over 2,000 amendments in the last six decades. These frequent changes have made the law complex and difficult to interpret.
The New Income Tax Bill, 2025, aims to:
Simplify compliance for individuals and businesses.
Introduce technology-driven assessments.
Enhance transparency and minimize litigation.
Align tax structures with India’s Digital Economy.
This is part of the government’s broader Direct Tax Code (DTC) vision, long pending since 2009.
🔍 What This Means for You
Whether you’re a salaried employee, freelancer, senior citizen, or someone involved in charitable or religious work, the proposed changes in the New Tax Bill 2025 could significantly affect how you plan your finances.
Key Takeaways:
File your returns on time — but if you miss it, there could still be hope for a TDS refund if the recommendations are accepted.
If you run or donate to a trust, watch out for how Clause 337 may change taxation norms for donations.
Stay alert for updates as the Finance Ministry begins implementing key features of the new framework.
🔗 Useful Resources:
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