Top 7 Highlights at a Glance :
Feature | Description |
₹12 lakh basic exemption | Continues benefit for middle class; zero tax up to ₹12 lakh |
Unified “Tax Year” | Replaces 'Previous Year'/'Assessment Year' two‑year confusion |
Simplified structure | 819 sections ➝ 536; 47 chapters ➝ 23; words halved |
Faceless digital assessments | Powered by CBDT; reduces corruption & human bias |
Refunds allowed post-deadline | Removed restrictions from earlier draft; easier refunds |
Anonymous donation cap | Trusts must serve social purposes, or lose anonymity |
Unrealized gains & search norms | UPS taxed early; clearer income‑tax search powers |
Why These Changes Matter :
1. Clarity & Taxpayer Ease: A leaner lawbook means fewer ambiguities and easier interpretation. The move towards a single 'Tax Year' aligns India with international practices and simplifies annual filings.
2. Boost to Digital Governance: With faceless assessments, the government aims to cut red tape, enhance transparency, and remove human intervention in tax disputes.
3. Fairer Refund Mechanism: Taxpayers no longer lose out if they miss the ITR deadline due to valid reasons.
4. Modernizing Enforcement: By expanding UPS taxation and refining search procedures, the legislation reduces loopholes and improves compliance efficiency.
Parliamentary Journey & Context :
• February 2025: Original draft introduced, then sent to Select Committee
• July 21, 2025: Select Committee (Chaired by Baijayant Panda) presented 285 recommendations
• August 11–12, 2025: Revised Bill tabled, Lok Sabha & Rajya Sabha passed it—amid walkouts—via voice votes
What to Expect from April 2026:
• Filings under 1 Tax Year
• More digital interactions with tax department
• Smarter refunds—even after deadlines
• Improved compliance for affluent & digital asset holders
Conclusion :
The Income‑Tax (No.2) Bill, 2025 marks a historic shift—ushering in a modern regime built for simplicity, transparency, and digitalisation. As it comes into force on 1 April 2026, taxpayers and advisors should gear up for a streamlined, tech-powered filing and compliance experience.
