Income Tax Bill 2025: No More ITR Filing Just for Refund – Major Relief Proposed for Low-Income Taxpayers

New Delhi, July 22, 2025 – If you are among the lakhs of people who file Income Tax Returns (ITR) every year only to claim a TDS refund, here's some big news: you may no longer need to file a return if your income is below the taxable limit.

According to media reports, the draft of the Income Tax Bill 2025—currently under review by a Lok Sabha Select Committee—includes a key recommendation to remove Section 263(1)(ix). This clause makes it mandatory to file ITR to get a refund, even when there is no tax liability.

💡 What Is the Issue?

Currently, if Tax Deducted at Source (TDS) is applied to your income—say from a bank FD, salary, or pension—you must file an ITR to claim that refund, even if your income is below the exemption limit.
Failing to file the return on time could invite:

• Late fees

• Interest penalties

• Even prosecution, in rare cases

👥 Who Is Most Affected?

This provision affects a large segment of non-taxable or low-income individuals, such as:

• Senior citizens

• People living on pensions

• Contractual or temporary workers

• Small investors with low-yield FDs

These individuals often fall below the basic exemption limit but are still required to go through the formalities of ITR filing just to get back the deducted TDS.

🏛️ What the Committee Recommends

The Lok Sabha Select Committee—led by Chairperson Baijayant Panda—has submitted its report on July 21, 2025, recommending removal of the clause that forces ITR filing for refund purposes.

Key points from the committee’s recommendations:

• Filing ITR just for refunds is an unnecessary burden on low-income taxpayers

• The threat of penalty or prosecution is unfair in such cases

• Removing this requirement will make the tax system simpler and fairer

✅ What Will Change If Approved?

If the recommendation is accepted:

• No need to file ITR if your income is below the basic exemption limit

• You can still get your TDS refund without filing a return

• No fear of penalty or legal action

• It will benefit millions of small taxpayers and senior citizens

📅 Timeline So Far

🧾 What This Means for Taxpayers

If you’ve been filing returns every year only for TDS refund, this new rule could end that hassle. It would also:

• Simplify compliance for elderly and economically vulnerable taxpayers

• Promote a more taxpayer-friendly ecosystem

• Reduce administrative load on the Income Tax Department

📝 Final Word

While the draft recommendation is yet to be passed into law, it's a positive signal for tax reform in India. This proposed change is seen as a step toward honoring honest taxpayers and making the system more equitable and efficient.