Revised Income Tax Bill 2025: Key Changes Explained
Why in the news
The government brought back a refined tax code bill after the select committee’s review, meant to supersede the six-decade-old 1961 Act.
Key facts
- Tabled in Lok Sabha; incorporates most of 566 recommendations.
- Single Tax Year term simplifies compliance.
- Alternate Minimum Tax removed for LLPs.
| Area | Change |
|---|---|
| Refunds | Refund denial clause for late ITR dropped |
| Corporates, MSMEs | Inter-corporate dividend deduction restored; MSME definition aligned with MSME Act |
| Property | Notional rent on vacant property removed; clear deductions for municipal taxes and interest |
| Compliance | CBDT empowered for digital-era rules; NIL-TDS option for zero-liability taxpayers |
| Trusts, LLPs | Transfer pricing relaxation |
| Section 80M | Deduction retained for companies under Section 115BAA special rate |
MAT and AMT
- MAT: floor tax on companies showing low or zero taxable income after deductions.
- AMT: similar floor for non-corporates such as LLPs, individuals and firms.
Section 80M
Lets a domestic company that receives dividend from another claim deduction for what it passes on as dividend in the same year, avoiding multi-layer corporate taxation.
Exam angle
- Act replaced: Income Tax Act, 1961.
- Know MAT (companies) versus AMT (non-corporates).