Parliamentary Select Committee Review of the Income Tax Bill 2025
The Parliamentary Select Committee has proposed significant amendments to the new Income Tax Bill 2025.
Key Recommendations
- Beneficial Owner Definition: Broadened to include individuals benefiting directly or indirectly from shares during the tax year, allowing them to carry forward losses.
- Inter-Corporate Dividends: Reinstatement of deductions for these dividends, which were missing in the draft.
- Standard Deduction: A 30% deduction post-deduction of municipal taxes.
- Pre-Construction Interest Deductions: Extended to include let-out properties.
- Taxpayer Relief:
- Recommendation for 'Nil' tax deduction certificates.
- More discretion for officers to waive penalties for non-deliberate non-compliance.
- Allowing refunds for late tax return filings for small taxpayers.
- Non-Performing Assets (NPA): Calls for clearer definitions to resolve disputes between banking and tax laws.
- Definition of 'Parent Company': Clear definitions are requested to address gaps in capital gains clauses.
- Non-Profit Organizations:
- Provisions to ensure religious-cum-charitable trusts retain exemptions for anonymous donations.
- Elimination of residual references to the 1961 Act to promote a self-contained code.
Expected Outcomes
The proposed changes aim to enhance transparency, reduce disputes, and align with the government's objective of establishing an efficient tax system.
