Key Proposals from the Parliamentary Committee on Income-Tax Bill, 2025
The parliamentary committee on the Income-Tax Bill, 2025, has put forward several significant recommendations aimed at simplifying the tax code and easing compliance for taxpayers. The report was presented by Baijayant Panda, chairperson of the 31-member select committee of the Lok Sabha, and marks a step toward making the tax system more accessible and less burdensome.
One of the key suggestions is to make income-tax rebate provisions unambiguous. This would help small taxpayers avoid the hassle of filing returns solely to claim refunds. Currently, individuals whose income falls below the taxable threshold but have had taxes deducted at source may be required to file returns to get their refunds. However, the committee suggests that such individuals should not be compelled to do so, as it could lead to unnecessary legal complications.
The report also addresses the issue of anonymous donations made to religious-cum-charitable trusts. It highlights the confusion among non-profit organizations (NPOs) regarding the interpretation of “wholly for charitable or religious purposes.” The committee recommends that the government revisit this clause to reduce litigation risks and provide clarity for both existing and future trusts.
Another important proposal is to exempt certain types of donations from taxation. The committee pointed out that the current law imposes a 30% tax on anonymous donations for all NPOs, which could negatively impact the hybrid sector of religious-cum-charitable trusts. By reintroducing suitable provisions, the government can support these organizations without imposing undue financial burdens.
Expert Reactions and Criticisms
Experts have given mixed reactions to the report. Rohinton Sidhwa, partner at Deloitte India, described the proposed amendments as “corrective” and noted some positive changes, such as reinstating deductions for inter-corporate dividends. This adjustment is expected to reduce the tax burden on companies distributing profits to shareholders.
Sameer Gupta, partner and national tax leader at EY India, acknowledged the extensive consultation process behind the report. However, he pointed out some inconsistencies, such as unclear withholding obligations for non-residents and potential anomalies in the formula for computing presumptive income for non-residents providing services or technology.
Despite these positive aspects, some members of the committee expressed concerns about the lack of transformative changes. Three dissenting voices—Lok Sabha MPs Amar Singh (Congress), Shashank Mani (BJP), and NK Premachandran (RSP)—argued that the legislation could have introduced more substantial reforms.
Premachandran’s letter emphasized the need for a “paradigm shift” in response to digital technology and global taxation trends. He suggested that the new tax law should focus on transformation rather than just reformatting the existing framework. Similarly, Amar Singh argued that the bill could have done more to reduce litigation, streamline appeal processes, and ease the burden on taxpayers.
Shashank Mani proposed including elements like assessing the government’s balance sheet, implementing risk-based tax accounting using technology, and improving communication with citizens to ensure smoother coordination.
Ongoing Discussions and Future Prospects
Amit Baid, head of tax at law firm BTG Advaya, highlighted that the committee missed an opportunity to address double taxation risks in holding company structures. Riaz Thingna, partner at Grant Thornton Bharat, noted that while the report includes findings on the bill’s shortcomings, it does not introduce any new elements. Some suggestions were rejected by the finance ministry, which stated they were outside the committee’s mandate.
Overall, the report represents a step toward simplification and clarity in the tax system. However, experts believe there is still room for more comprehensive reforms that could significantly improve the experience for taxpayers and reduce administrative complexities.
