Filing your income tax return (ITR) may soon become more easier. The Select Committee submitted a report to Parliament, recommending major changes that may improve the annual tax filing experience.

The committee submitted its report to Parliament on 21 July. It’s over 4,500 pages long and includes 285 suggestions to improve the draft New Income Tax Bill, 2025, which is meant to replace the old 1961 Act. Among the many proposals, a few stand out that could directly benefit ordinary taxpayers. Here are three major changes being considered:

NO PENALTY IF YOU’RE FILING JUST FOR REFUND

At present, if you miss the ITR deadline, even if you’re filing just to get a refund, you may be charged a penalty of up to Rs 1,000.

But the committee has recommended a welcome change. If your total income is below the taxable limit and you're filing only to claim a refund, you should not be penalised for missing the deadline.

This move is aimed at small taxpayers and salaried individuals who often file returns just to claim a refund but end up paying fines. It could offer relief to lakhs of people and make the system fairer.

CHANGES IN TAX RULES FOR HOUSE PROPERTY INCOME

If you earn money from house property, there may be some relief coming your way. The Select Committee has suggested two important changes.

First, the 30% standard deduction, which is already allowed after municipal tax deductions, should be clearly mentioned in the new law. This will remove confusion.

Second, the benefit of home loan interest deductions, currently only available for self-occupied properties, should also be extended to rented properties. These suggestions could make things easier for middle-class homeowners and those investing in property for rental income.

SIMPLER REFUND PROCESS FOR TDS AND TCS

Many taxpayers face long delays in getting refunds for TDS (Tax Deducted at Source) or TCS (Tax Collected at Source). The committee wants the refund process to be quicker, easier, and more transparent.

The CBDT (Central Board of Direct Taxes) has also said that new rules are being drafted under a policy called “Enforcement with Empathy,” aiming to reduce hassles for honest taxpayers.

If these suggestions are accepted, refund delays might become a thing of the past.

WHAT HAPPENS NEXT?

The government is currently reviewing the report. The final version of the Income Tax Bill is likely to be passed in the Budget session next year. Once approved, it will replace the Income-Tax Act of 1961.

The goal is to modernise the tax system and make it more digital, transparent, and friendly for the average taxpayer. These proposed changes show that the focus is shifting towards making tax filing easier and less stressful.

For small taxpayers, working professionals, and those earning rental income, this could be a major step in the right direction.