The Select Committee of the Lok Sabha on Monday tabled a report proposing changes to the draft Income-Tax Bill, 2025, which has largely garnered positive reactions from India’s tax experts, many of whom lauded its efforts toward simplification and consistency.While the Committee has refrained from policy-level changes in keeping with its mandate, stakeholders highlighted several areas where further refinement and legislative clarity would be essential to reduce future disputes.
Sameer Gupta, Partner and National Tax Leader at EY India, commended the Committee’s consultative approach and its attempt to resolve drafting anomalies.
“The comprehensive Report reflects the immense effort towards stakeholder consultation and simplification. Industry welcomes clarity on inter-corporate dividend deduction, NIL withholding certificates, and in-house R&D deductions,” he said. However, Gupta noted, “The Committee rightly remained within its mandate, largely limiting itself to drafting clarifications. Some critical areas like the sequence of municipal tax deduction in property income and MAT/AMT alignment still require re-examination.”That sentiment was echoed by Amit Maheshwari, Tax Partner at AKM Global, who viewed the Committee’s work as “a clear commitment to streamlining and modernizing India’s direct tax framework.”Maheshwari pointed to notable amendments such as allowing companies to carry forward losses upon restoration of shareholding, pre-construction interest deductions for let-out properties, and refund claims even when returns are filed after the due date.“These recommendations underscore the Committee’s focus on promoting taxpayer protection, enhancing fairness, and reducing compliance burdens,” he added.Riaz Thingna, Partner at Grant Thornton Bharat, emphasised that the Committee had respected its boundaries, focusing primarily on textual and structural improvements.“The Committee has stayed aligned with the Finance Minister’s original objective—textual rationalisation, not policy overhaul. It identifies inconsistencies and recommends alignment with the current law,” he noted.Citing examples, he mentioned suggestions to reinstate the phrase “in the circumstances of the case” under GAAR provisions, harmonize the definition of capital assets with the Finance Act 2025, and clarify refund eligibility in the absence of timely return filings. “Suggestions beyond the drafting scope have been left for future consideration,” he added.Rohinton Sidhwa, Partner at Deloitte India, viewed many of the latest amendments as corrective in nature.“Amendments restore critical provisions inadvertently omitted earlier, such as inter-corporate dividend deductions, ‘beneficial owner’ clarity, and pre-construction interest treatment,” he explained. However, Sidhwa also flagged administrative challenges with the new definition of “beneficial owner,” particularly in the context of funds and indirect holdings.“It’s uncertain from the language when a shareholder would be regarded as deriving benefits directly or indirectly,” he said.Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, called the report “a major step toward reforming India’s direct tax framework.”Highlighting over 30 proposed recommendations, he noted their focus on modernising definitions like “capital asset” and “infrastructure capital company,” streamlining deductions, and reducing procedural rigidity.“Importantly, the report addresses concerns of charitable and not-for-profit entities by advocating clearer definitions and restoring the concept of deemed application,” he said, adding that suggestions such as extending electronic payment norms to professionals and prescribing qualifications for valuers “aim to create a jurisprudentially robust and administratively efficient tax regime.”Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co, appreciated the Committee’s restraint in avoiding policy shifts while correcting drafting lapses.“The Parliamentary Committee has stayed true to its intent of the Income Tax Bill being a textual simplification exercise,” she said. “The reinstatement of inter-corporate dividend relief under the 22% tax regime is a major win for multi-tier structures,” she added.However, Puri expressed concern that some stakeholder suggestions—particularly regarding digital space search and seizure powers—did not find their way into the report. “At first blush, no key changes seem to have been recommended on this front,” she noted.Despite its limited scope, the Committee’s report is seen as a key milestone in India’s move toward a more streamlined direct tax regime. Yet, as the Ministry of Finance reviews the recommendations before finalising the Bill, experts caution that areas such as withholding tax obligations for non-residents, complex ownership tracing, and transitional mechanics require closer scrutiny to ensure clarity and reduce litigation.The government’s intention to bring the new Income Tax Bill, 2025, in line with current practices—without overhauling existing policy—has largely held. Still, as several experts observed, the effectiveness of this legislative rewrite will depend not only on technical precision but also on how well it addresses practical ambiguities in implementation.
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