The new Income Tax Bill, which makes income tax rules easier, has been approved. According to CBDT sources, the new tax rules aim to make things simple for taxpayers. It extends dividend deduction benefits to companies and gives clear rules for taxation of partnership firms.

The new Income Tax Bill also tries to fix old problems in long-standing tax laws. It includes important changes to recent financial laws. These changes make the rules easier to follow, help better administration, and reduce disputes.

Major Changes in the New Income Tax Bill

Section 80M Deduction for Companies

Companies that follow the new tax regime can now claim deduction under Section 80M on dividends received from other companies.

Relief for Families –

Pension and GratuityThe deduction for commuted pension and gratuity received by family members is now clearly defined under the new law.

MAT and AMT Separated

The rules for Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) are now separate to avoid confusion.

AMT Applies Only When Deductions Are Claimed

Non-corporate taxpayers, including LLPs, are subject to AMT only if they claim certain deductions. LLPs with only capital gains income are not liable.

Professionals Must Use Digital Payments

The word “profession” has been added to “business” in the electronic payment rules. Professionals with annual income over ₹50 crore must use the prescribed electronic payment methods.

Refunds Allowed Even if Returns Are Late

Taxpayers who miss the ITR filing deadline can still claim refunds because a restrictive clause has been removed.

Clearer Rules on Losses

Rules for carrying forward and setting off losses are rewritten for clarity, though the basic rules remain the same.

Shift from “Receipts” to “Income”

The bill focuses on income-based taxation, moving away from “receipts” and aligning with the old 1961 Act.

Changes Affecting Non-Profit Organizations (NGOs)

Capital Gains Treated as Income Use

When NGOs use capital gains to buy new assets, it will still count as income use.

Delayed Income Can Be Counted Later

If NGOs fail to use 85% of income because of delayed receipts, they can count it in the year it is actually received.

Simpler Rules for Anonymous Donations

Tax rules for anonymous donations are simplified and now apply to multi-purpose NGOs.

Clear Definition of Multi-Purpose NGOs

The bill clearly defines “multi-purpose” NGOs, which was unclear before.

No Need to Invest 15% of Income

The rule requiring NGOs to invest 15% of unused income in specified instruments is removed.

Simplifying Procedures

Shorter TDS Correction Period

The period to file TDS correction statements is reduced from 6 years to 2 years, which will reduce delays and disputes.

Consistency With Other Amendments

Changes made in the Finance Act, 2025 and the Taxation Laws (Amendment) Bill, 2025 are included in the new bill for consistency.