Finance Desk – In a major move that could help small taxpayers, a Lok Sabha Select Committee has recommended changing a rule in the proposed Income-Tax Bill, 2025. The committee wants to remove the requirement of filing income tax returns just to get a refund, even if the person’s income is below the taxable limit.
Right now, if your income is below the exemption limit but tax has been deducted from your income (like TDS by banks or employers), you still have to file a return to get that money back. If you don’t file it on time, you could even face penalties or, in some cases, prosecution.
This rule has been causing a lot of trouble for people like senior citizens, pensioners, and temporary workers, whose incomes are small but still face tax deductions. Many of them aren’t required to pay tax at all, yet are forced into filing returns just to avoid legal trouble.
The Select Committee said this rule is unfair and puts too much pressure on those who shouldn’t even be in the tax net. It has recommended removing Sub-clause (1)(ix) of Clause 263 from the draft Bill to fix this issue.
If accepted, this change would make it easier for low-income individuals to claim refunds without worrying about penalties or prosecution. The idea is to keep the tax system fair, simple, and less stressful for honest taxpayers.
Baijayant Panda, the Committee’s Chairperson, presented this report in Lok Sabha on July 21, 2025. The Income-Tax Bill was introduced earlier this year and was reviewed by a 31-member Select Committee.
If the government acts on this recommendation, it could bring much-needed relief to millions of small taxpayers across India.
