What Changes Did the Finance Ministry Make to the Income Tax Bill?
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Synopsis
The Finance Ministry has made significant updates to the Income Tax Bill, 2025, including a new interest rate on short advance tax payments. This reform aims to streamline tax regulations and align them with existing laws, promising a more efficient tax process for taxpayers.
Key Takeaways
- The Finance Ministry has clarified the interest rate on advance tax shortfalls to 3 percent.
- Advance tax must be paid in four installments throughout the year.
- Late payments incur interest for a minimum of three months.
- The Income Tax Bill, 2025 aims to simplify existing tax laws.
- Most recommendations from the Select Committee have been incorporated into the revised bill.
New Delhi, Aug 12 (NationPress) The Finance Ministry has released a corrigendum to the Income Tax Bill, 2025, which clarifies the interest rates applicable for shortfalls in advance tax payments. This amendment introduces a 3 percent interest rate for such deficiencies, aligning the clause with the regulations set forth in the Income Tax Act of 1961.
Taxpayers with an annual tax obligation of Rs 10,000 or greater must remit advance tax in four separate installments due on June 15, September 15, December 15, and March 15.
If any shortfall occurs, even by a single day past the quarterly deadline, interest is imposed for a minimum duration of three months.
The Income Tax Bill, 2025, which was approved by the Lok Sabha on Monday, aims to replace the outdated 60-year-old income tax legislation, emphasizing simplification through fewer chapters and reduced language.
On Monday, Finance Minister Nirmala Sitharaman presented the revised bill in the house, following the government's decision to retract the previous draft introduced on February 13 this year.
To eliminate confusion due to various drafts, the earlier version was withdrawn on August 8 after being reviewed by a Parliamentary Select Committee. The authorized adjustments have now been compiled into a comprehensive updated draft of the bill.
The updated draft incorporates most of the 285 recommendations proposed by the Select Committee, which was chaired by BJP MP Baijayant Panda.
Key highlights of the Income Tax Bill, 2025 include:
- Companies opting for the new regime are eligible for deductions under Section 80M of the 1961 Act (Clause 148 of the IT Bill, 2025).
- Clause 93 of the 2025 bill provides for deductions related to family member gratuities and commuted pensions.
- Section 206 separates the stipulations for Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) into two distinct sub-sections.
- The AMT provisions are only relevant for non-corporations claiming deductions, excluding LLPs with solely capital gains income from AMT if they have not claimed any deductions.
- In clause 187, the term 'profession' has been added after 'business' to permit professionals earning over Rs 50 crore annually to utilize designated electronic payment methods.
- With the removal of Clause 263(1)(ix), greater flexibility is afforded to enable refund claims when returns are not filed timely.
Point of View
It is essential to recognize the Finance Ministry's initiative in refining the Income Tax Bill, 2025. This amendment not only clarifies interest rates on advance tax payments but also signifies a broader push towards simplifying tax laws, which is crucial for taxpayers navigating the complexities of the current system.
NationPress
08/10/2025
Frequently Asked Questions
What is the new interest rate for short advance tax payments?
The new interest rate specified in the corrigendum is 3 percent for shortfalls in advance tax payments.
When are the advance tax installments due?
Taxpayers are required to pay advance tax in four installments due on June 15, September 15, December 15, and March 15.
What happens if advance tax is paid late?
If there is a shortfall in payment, even by one day, interest will be levied for a minimum of three months.
What key changes are included in the Income Tax Bill, 2025?
The key changes include provisions for deductions under Section 80M, adjustments for family member gratuities, and the separation of MAT and AMT.
Who is affected by the AMT provisions?
The AMT provisions apply to non-corporations that have made deduction claims, while LLPs with only capital gains income are exempt if no deductions are claimed.
