TDS refund rules to be made simpler under Income Tax Bill 2025? Here’s what we know

Taxpayers often have to file income tax returns just so to claim a refund for having tax deducted at source for various reasons even when their income does not fall under the taxable bracket. The government is reportedly working on fulfilling this requirement simpler now.

Instead of filing ITRs solely for claiming TDS refund, taxpayers may be able to do it by just filling up a simple form, according to a report by The Hindustan Times.

The Select Committee on the Income Tax Bill 2025 made a recommendation to this effect to the government, the report said citing functionaries related directly with the legislation.

“The panel felt that the current mandatory requirement to file a return solely for the purpose of claiming a refund can inadvertently leads to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom TDS has been deducted. In such cases, the law should not compel a return merely to avoid penalty,” the official, who was not named, was quoted as saying by the newspaper.

The government has accepted the suggestion and will implement it as an amendment to the bill, the person said.

Two other panel members cited by HT confirmed that the idea is for the CBDT to work out a simple form for those who are not under the tax threshold, instead of them filing IT returns.

“We discussed it in the meeting. The idea is instead of filing an ITR, one can file a simple form for claims. The process will be linked with Form 26AS.”

Form 26AS is a consolidated statement of tax deducted and collected at source.

What did the Select Committee say?

The Select Committee on the Income Tax Bill 2025 suggested to do away with a clause that says “a person who intends to make a claim of refund under Chapter 10” should file an IT return.

Under the recent amendments to the new tax regime, people getting salaries up to ₹12.75 lakh do not need to pay taxes. However, when salaried employees do not present the required documents, the employer deducts TDS.

The panel also added more accountability to the controversial provision that empowers tax officials get access to a taxpayer’s digital devices.

One of the functionaries quoted by HT said that the new bill aims to simplify income tax laws as well as make tax administration nimble and efficient.

“For example, the existing Income-Tax Act, 1961 does not specifically mention digital devices, which often become a contentious point in case of litigation. This bill seeks to specifically authorise officials to gain access to digital devices, besides books of account, ledgers and other manual records showing details of income and expenditure,” he was quoted as saying.

The new law is likely to be implemented from April 1 next year, the person reportedly said.

A Parliamentary panel examining the Income Tax Bill-2025 on Wednesday made 285 suggestions on the draft legislation