A parliamentary panel has suggested major changes in the New Income Tax Bill, 2025, especially about TDS refunds and anonymous donations to charitable and religious trusts.
What the Panel Recommended:
1. TDS Refunds Without Penalty for Late ITR Filing
The panel recommended that individual taxpayers should be allowed to file Income Tax Returns (ITR) and claim TDS refunds even after the deadline — without being fined.
Right now, if someone’s income is below the taxable limit but some TDS (tax deducted at source) was still cut from their earnings, they must file a return by the deadline to get a refund. If they don’t, they might face legal trouble — even if they don’t actually owe any tax.
To fix this, the committee wants to remove a rule (Clause 263(1)(ix)) that forces people to file a return just to avoid penalties, especially when they are only doing it to claim a refund.
2. Tax Exemption for Anonymous Donations to Religious and Charitable Trusts
The panel also looked into how anonymous donations (donations where the donor’s name is not known) are taxed when given to non-profit organisations (NPOs).
Right now, under Clause 337 of the new bill, all anonymous donations to registered NPOs will be taxed at 30%, unless the organisation is only religious.
But many NPOs in India serve both religious and charitable purposes. The committee said it’s not fair to tax these organisations because:
- They often receive donations in traditional ways where it’s hard to know who donated.
- The current law (Income Tax Act 1961, Section 115BBC) does give some relief for such donations to religious-cum-charitable trusts.
So, the panel suggested:
- Bringing back a similar rule from the 1961 Act that exempted these donations from tax.
- Making sure these kinds of NPOs are not taxed unfairly.
These recommendations aim to protect small taxpayers and support charitable and religious organisations that depend on public donations. The committee believes the new bill should simplify the rules without hurting genuine individuals or groups.
The report was presented in Parliament by Baijayant Panda, chairperson of the Select Committee reviewing the bill.
