In a surprise move, the Union Finance Minister Niramala Sithraman has officially withdrawn the much-discussed Income-Tax Bill, 2025, just months after introducing it in the Lok Sabha.

The decision, announced today by Finance Minister Nirmala Sitharaman, comes after the Select Committee’s report and additional recommendations from various stakeholders.

The Income-Tax Bill, 2025 was tabled in the Lok Sabha on February 13, 2025 and referred to the Select Committee the same day. The Committee submitted its report on July 21, 2025, with most of its recommendations accepted by the government.

However, the government stated that more corrections were needed — including refining the drafting, aligning phrases, ensuring consequential changes, and better cross-referencing — to ensure clarity in legislative language.

As a result, the current Bill stands withdrawn, and a fresh Bill will soon be introduced in the Lok Sabha to replace the over six-decade-old Income-tax Act, 1961.

The old Income-tax Act, 1961 is still in force for now. The new Bill will likely incorporate all improvements, making it the most significant overhaul of India’s tax law in decades. Taxpayers, businesses, and professionals should gear up for a complete restructuring of income tax provisions.

The move has set off a storm of discussions in financial, corporate, and political circles — with many seeing it as the government’s attempt to “get it absolutely right” before making one of the most critical reforms in India’s tax history.

Read More: GST ITC Allowed on Construction of Concrete Tower for VCV Lines: AAAR Relies on Safari Retreats Judgement