Earnings Tax division denies fee change beneath new I-T Invoice, calls stories deceptive

The Earnings Tax Division on Tuesday clarified that the Earnings Tax Invoice, 2025, doesn’t suggest any adjustments to present tax charges, together with these relevant to long-term capital features (LTCG). The clarification comes amid hypothesis that the invoice, launched earlier this 12 months, aimed to tweak tax buildings.

“The Earnings Tax Invoice, 2025 goals at language simplification and removing of redundant or out of date provisions. It doesn’t search to alter any charges of taxes,” the division mentioned in a submit on X. It additionally assured that any ambiguity on the problem could be addressed in the course of the invoice’s passage in Parliament.

Parliamentary panel submits report

The draft laws, which seeks to switch the Earnings Tax Act of 1961, was launched within the Lok Sabha in February and referred to a Choose Committee for detailed examination. The committee, chaired by BJP MP Baijayant Panda, submitted its report on July 21 with 285 suggestions.

These embrace redrafting key definitions resembling “capital asset”, “father or mother firm”, and “micro or small enterprise” to raised mirror up to date legislation. The panel has additionally proposed restoring sure deductions, resembling inter-corporate dividend exemptions, pre-construction curiosity on rented properties, and normal deductions for municipal taxes.

Reduction for small taxpayers, charities

In a bid to ease compliance, the committee has advisable penalty waivers in instances of non-wilful non-compliance by small taxpayers, refund eligibility for late filers, and restoration of the “deemed software” clause for charitable trusts. It additionally pushed for the removing of residual references to the 1961 Act to make the brand new code extra streamlined and litigation-resistant.

Implementation from FY26

The Finance Ministry is predicted to include many of the recommendations into the ultimate model of the invoice, which is prone to be handed in the course of the ongoing Monsoon Session. As soon as enacted, the brand new legislation will come into impact from April 1, 2026, ushering in a modernised and simplified tax regime.

(With inputs from PTI)