New Income Tax Bill: Changes in TDS refund claims while filing ITR? Top points suggested by Parliamentary panel
New Income Tax Bill 2025: A Parliamentary committee reviewing the new Income Tax Bill has recommended that the Ministry of Finance should permit individual taxpayers to file returns and claim TDS refunds beyond the deadline without penalties. The committee also advocated for tax exemption on anonymous contributions to trusts serving both religious and charitable purposes.The report, presented in the Lower House by Select Committee chairperson Baijayant Panda of BJP, scrutinised the Income Tax Bill, 2025, which aims to replace the Income Tax Act, 1961.
New Income Tax Bill: Top Changes Suggested by Panel
Regarding TDS refund claims by individuals not otherwise required to submit tax returns, the committee proposed eliminating the Income Tax Bill clause that requires mandatory filing of I-T returns by the deadline, PTI reported.The committee notes that the present requirement to submit returns solely for refund purposes could unintentionally result in legal action, especially affecting small taxpayers whose earnings are below taxable limits but have experienced tax deductions at source.“In such scenarios, the law should not compel a return merely to avoid penal provisions for non-filing. The committee, therefore, recommend to remove sub-clause (1)(ix) from Clause 263 to provide flexibility for allowing refund claims in cases where the return is not filed in due time,” the report specified.According to a PTI, the committee sought clarification regarding the taxation of anonymous donations to Non-Profit Organisations (NPOs) that serve both charitable and religious purposes, requesting the removal of existing ambiguities.The panel expressed opposition to the taxation of NPO ‘receipts’, stating it contradicts the Income Tax Act’s principle of real income taxation. They advocated for the reintroduction of the term ‘income’ to ensure taxation applies only to the net income of NPOs.Noting the considerable differences in how anonymous donations to registered NPOs are treated, the committee recommended tax exemption for both religious and charitable trusts, acknowledging that many organisations operate with dual objectives.The committee highlighted an oversight in the Bill regarding religious-cum-charitable trusts, despite its aim of textual simplification. This omission could negatively affect numerous organisations within India’s NPO sector.Under Clause 337 of the Income Tax Bill, 2025, all registered NPOs would face a uniform 30 per cent taxation on anonymous donations. The only exception would apply to organisations established exclusively for religious activities.This represents a significant shift from Section 115BBC of the Income-tax Act, 1961. The current legislation offers broader exemptions, where anonymous donations to trusts or institutions established for both religious and charitable purposes remain untaxed. However, this exemption excludes cases where such donations are specifically allocated to universities, educational institutions, hospitals, or medical facilities operated by the same trust or institution.The current regulation appropriately acknowledges these “religious-cum-charitable” institutions as a separate and legitimate category qualified for benefits on unnamed donations, recognising that such establishments frequently receive funds through conventional methods where identifying donors is unfeasible.“The committee strongly urge the reintroduction of a provision analogous to the explanation found in Section 115BBC of the 1961 Act,” stated the Select Committee report.
