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Lok Sabha Passes Income-Tax and Taxation Laws Bills

Why in the News?

The Lok Sabha passed the Income-Tax (No. 2) Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025 through a voice vote amid opposition protests from the treasury benches, marking a significant step in simplifying and reforming India’s tax framework.

Reform Journey and Legislative Process

  • Since 2014, the Government under Prime Minister Narendra Modi has implemented multiple tax reforms for ease of compliance.
  • The simplified Income-Tax Bill, 2025 was introduced on 13 February 2025 after a record six-month simplification exercise.
  • The Bill was referred to a Select Committee, which submitted its report on 21 July 2025.
  • The Government accepted most recommendations of the committee.
  • The reforms focus on simplifying provisions while retaining fiscal discipline and ensuring ease of doing business.

Parliamentary Proceedings and Reactions

  • Bills were passed in Lok Sabha via voice vote, despite opposition protests over unrelated political issues.
  • Finance Minister Nirmala Sitharaman highlighted that the changes are a continuation of the government’s decade-long tax reforms.
  • The Bills are expected to streamline compliance, reduce litigation, and align tax laws with modern economic needs.
  • Seen as a major move towards predictable and stable tax policies, fostering investor confidence and addressing related matters in taxation.

Key Provisions of the Bills:
● Income-Tax (No. 2) Bill, 2025 – Consolidates and amends laws relating to income tax.
● Taxation Laws (Amendment) Bill, 2025 – Amends the Income-tax Act, 1961 and Finance Act, 2025.
● Introduces deduction under Section 80M for companies under the new regime (Clause 148).
● Aims to make the tax system efficient, transparent, and taxpayer-friendly.
● Reflects continuity in corporate tax reforms, personal income tax reforms, changes in capital gains taxation, and merger of trust provisions.

These bills represent a significant step in the government’s ongoing efforts to reform and simplify India’s tax system. The changes are expected to provide Rs 25,000 crore in tax relief and foster a more conducive environment for business and economic growth. While some opposition members raised concerns about certain provisions, the overall response from industry leaders and tax experts has been positive, viewing these reforms as strengthening India’s economic framework and enhancing its global competitiveness.