New Income Tax Proposal Delivers a Powerful Blow with Changes to Refunds, Dividends, and NIL TDS - Discover the Latest Alterations
News Article: Revised Income Tax Bill 2025 Brings Significant Changes
The revised Income Tax Bill 2025, scheduled to be introduced on August 11, is set to introduce several key changes, including updates to tax refunds, corporate dividends, and NIL TDS certificates.
Tax Refunds
One of the most notable changes is the removal of a controversial clause that previously blocked refunds for late filers. Now, genuine reasons such as illness or technical issues will be considered to allow refunds even if tax returns are filed after the deadline. This aims to make refund claims fairer and more flexible.
Corporate Dividends
The revised Bill includes updates to controlled foreign corporations (CFCs) income taxation, now named Net CFC Tested Income, affecting global intangible low-tax income (GILTI). Changes to deductions and foreign tax credits also indirectly impact multinational corporate dividend taxation. However, the detailed corporate dividend provisions are not fully outlined in the available information.
NIL TDS Certificates
While specific details on NIL TDS (Tax Deducted at Source) certificates are not explicitly mentioned, the Bill aims to simplify and clarify tax procedures overall, including easing compliance burdens. Typically, NIL TDS certificates help taxpayers exempt themselves from TDS when no tax is due. The new Bill’s emphasis on modernization and simplification suggests procedural updates that may make obtaining such certificates easier, but exact updates are not detailed in the sources.
Other Important Aspects
The revised Bill aims to replace the Income Tax Act, 1961, significantly reducing the number of sections from 819 to 536 and removing archaic language to improve readability and implementation. It also abolishes the distinction between assessment year and previous year, replacing both with a single tax year concept to simplify tax filing.
For individuals in the U.S., the Bill extends and permanently fixes the federal income tax brackets and rates set by the 2017 tax cuts, maintaining the top marginal rate at 37% instead of reverting to 39.6%. For businesses, major changes affect foreign income taxation, such as repealing the 10% deemed return on tangible assets and changing deduction limits, raising complexity and possibly increasing tax exposure for capital-intensive and multinational firms.
In summary, the revised Income Tax Bill 2025 focuses on simplifying tax laws, improving taxpayer rights on refund claims, modernizing language and structure, and revising corporate and foreign income taxation frameworks with significant impacts expected from April 1, 2026.
Finance and business sectors will be directly affected by the revised Income Tax Bill 2025, with notable changes to corporate dividends and tax refunds. The adjustments to controlled foreign corporations (CFCs) income taxation, now known as Net CFC Tested Income, will impact global intangible low-tax income (GILTI), and changes to deductions and foreign tax credits may indirectly affect multinational corporate dividend taxation. Moreover, genuine reasons for late tax returns may now allow refunds to be claimed, making the refund system fairer and more flexible.
