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Taxation Central Ministry of Finance Income Tax Act, 1961

Income-tax (No. 2) Bill, 2025

11-Aug-2025 | CG-DL-E-12082025-265353

Government of India has issued the new bill for Income Tax (2) Act, 2025 by repealing the first one which was initially introduced on 13th Feb 2025, effective from 01st April 2026.

Highlights of the bill are:
1. The new Bill aims to simplify the tax system for all. It is built on the core 'SIMPLE' principles, clarifies deductions, and strengthens cross-referencing across various provisions.
2. Taxpayers can now claim refunds even in cases of late filing of returns.
3. No financial penalties will be imposed for the late filing of TDS returns.
4. The term 'tax year' will now replace older terms such as 'financial year' and 'assessment year', simplifying terminology.
5. Previously, pre-construction interest deductions were allowed only for self-occupied property. This has now been extended to both self-occupied and let-out properties.
6. Under the old bill, a Nil Tax Deduction certificate for TDS on payments such as the accumulated balance of PF, insurance commission, rent, mutual fund units, interest, and LIC payouts could only be claimed by resident individuals over 60 years of age. The new bill removes this restriction, allowing all resident individuals, regardless of age, to claim it. This corrects a drafting error in the earlier version.
7. The Bill retains certain search and seizure powers for tax authorities. While the earlier draft explicitly referred to 'digital space', the updated version omits this term from the main clause but includes it under the definition of 'computer systems'. As a result, access to electronic records remains possible, though the language has been refined.

For more information, please refer to the specified document.

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