New Income Tax Bill-2025: An important Parliamentary committee has suggested shifting policies within the upcoming Income Tax Bill-2025. Most notable of the suggestions is the policy regarding tax refund. The committee noted that even with a missed deadline for the Income Tax Return (ITR) filing, a taxpayer is eligible for refund. Currently, the refund policy in the new bill does not mention this.What modifications does the committee want?1. Simplified TDS refund: For individuals who do not earn enough to be taxed, their TDS deduction should be fully refunded. Individuals are going to be able to fill a basic refund request form. In addition, individuals will have the ability to obtain a “Zero TDS certificate” which guarantees that they will be sheltered from any TDS deductions.2. Tax exemption on anonymous donations: Gurudwaras, temples, and mosques that do not pay tax on anonymous donations are exempt from paying tax on such donations. The committee noted that these organizations do not have “income,” but “donation” thus the tax is misplaced and in fact wrong.3. Companies can feel at ease: If a company does not wish to be taxed on the dividends it receives from other companies, then it will qualify for an exemption. This exemption was present in old law, and it has been recommended for reinstatement in the new bill, so it should be retained. 4. Some reliefs for the Medicare Beneficiaries: If you are a Medicare beneficiary, then you will get a full deduction on the claimed municipal tax. Those who are currently servicing a loan on the house they are building will be able to claim a deduction on its interest irrespective of whether the house is rented out or not. Aid to small entrepreneurs and new business ventures The criteria for MSMEs (micro small and medium enterprises) will be made less complex. New ventures will be able to avail extra tax relief on their steep costs involving rigorous research and development. There will be special provisions to foster scientific research.Why are these changes essential?The committee expressed its concern to the government regarding the new bill, stating that its primary aim was to streamline the tax system. However, the committee noted the requirements of the general public, their socio-religious trusts, and small-scale entrepreneurs were overlooked. They have included the proposals into a single report on 32 subjects comprising 4584 pages. Now it is upon the government to choose which proposals to implement.
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