New Income Tax Bill: Under the current Income Tax Act, 1961, if a person did not file Income Tax Return (ITR) within the prescribed time limit, then he was not entitled to claim TDS refund. This rule has been changed in the new Income Tax Bill.
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New Income Tax Bill: The new amended Income Tax Bill 2025 was passed by the Lok Sabha on Monday. Now this bill will require approval from the Rajya Sabha and the signature of the President. It is expected that the new Income Tax Bill will come into force from April 2026. The government has claimed to make the tax process simple, transparent, and taxpayer-friendly in the new Income Tax Bill. Many important provisions related to Tax Deducted at Source (TDS) have been included in the Income Tax Bill 2025. The new bill provides that TDS refund can be claimed by filling ITR even after the deadline for filing the prescribed income tax return has expired.
Under the existing Income Tax Act, 1961, if a person did not file Income Tax Return (ITR) within the stipulated time limit, he was not entitled to claim TDS refund. This rule has been changed in the new bill. In this, clause 263(1)(ix) has been removed and the exemption has been given to claim TDS refund even if the return is filed late. This is a relief especially for those who are unable to file returns on time due to illness, technical problems or other reasons. The rules related to TDS have been further clarified in the new bill so that it is easy for taxpayers to understand and comply. The language of the provisions has been simplified, and unnecessary complexities have been removed.
Nil TDS certificate will be issued
In the new Income Tax Bill, relief has also been given to those people who have no tax liability. Such persons or institutions will be able to obtain NIL-TDS certificate in advance. This will not deduct TDS on their payments. The time limit for filing details of TDS claims has also been reduced from 6 years to 2 years in the new Act. This is expected to reduce complaints and disputes related to tax deduction.
The word ‘profession’ has been added to provision 187 of the Income Tax Bill. This will allow those professionals whose annual receipts are more than Rs 50 crore to adopt the prescribed electronic payment mode. This will help in further streamlining the TDS process. TCS will not be applicable on money sent under the Liberalized Remittance Scheme by taking a loan for studies abroad. In the case of income from house property, it has been said that 30% standard deduction will be calculated on the annual value only after deducting municipal tax. Similarly, the matter of deduction on home loan interest for pre-construction period has been clarified.
There will be benefit of tax exemption on the entire pension
Provision of deductions has been made for commuted pension and gratuity for family members. This rule will apply to those who receive pension from some funds listed in Schedule VII of the bill. In this, deduction can be taken on the entire pension. Also, on the death of the employee, deduction will be available on the entire amount of gratuity received by the family.
