Income Tax Bill 2025: Key Changes for Companies and Professionals

The government has introduced the Income-tax Bill, 2025, as a modernised version of the Income-tax Act, 1961. While the core structure remains, the bill brings clearer rules, simpler compliance, and more benefits for taxpayers, especially corporates and professionals.

Major Corporate Changes

• New Tax Regime Benefits: Companies choosing the new tax regime can now claim deductions under Section 80M (Clause 148).
   
• Pension & Gratuity Deductions: Family members receiving commuted pensions and gratuities will get deductions under Clause 93.
   
• MAT & AMT Separation: Section 206 separates Minimum Alternate Tax (MAT) for corporates and Alternate Minimum Tax (AMT) for non-corporates. LLPs with only capital gains income and no deductions are exempt from AMT.

Professional and Digital Economy Provisions

• Electronic Payments: Clause 187 adds “profession” to electronic payment rules, requiring professionals with over ₹50 crore receipts to use digital modes.

Refunds & Losses

• Late Refunds Allowed: Clause 263(1)(ix) is removed, allowing refund claims even if returns are filed late.
   
• Loss Set-off Rules: Carry forward and set-off provisions have been rewritten for clarity, but without major changes.

Shift in Tax Focus

• From Receipt to Income: Tax rules now focus on “income” rather than “receipts.”
   
• Non-Profit Benefits: Capital gains reinvested by non-profits will count as income application; shortfalls in the 85% income rule due to late receipts can be adjusted in the year of actual receipt.

Also Read: ITR Filing 2025: How Can Your Health Insurance Premium Cut Tax Bills?

Other Key Adjustments

• Anonymous Donations: Treatment aligned with existing law.
   
• Mixed-Object Non-Profits: Clearer classification rules.
   
• 15% Income Investment Rule: Mandatory rule removed.
   
• TDS Correction Period: Reduced from 6 years to 2 years.

Conclusion

The Income Tax Bill 2025 blends old structure with modern reforms, aiming to simplify compliance, expand benefits, and better suit today’s digital and professional economy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.