Finance Minister Nirmala Sitharaman has introduced the New Income Tax Bill 2025 in the Lok Sabha. Earlier, on 7 February 2025, the Union Cabinet approved this bill. Now this new law will replace the 6-decade-old Income Tax Act. This bill will make the tax system simpler, transparent and more effective. Let us tell you that in the new bill, the government has laid more emphasis on making the law easier. The new law will replace the old Income Tax Act, 1961. The existing Income Tax Act was implemented in 1961. Being decades old, it had become technically complex. The old bill was not fully suited for the current digital and modern economy. It had become very complicated due to frequent amendments. Therefore, the government has introduced the new Income Tax Bill 2025 to simplify the tax system, provide relief to taxpayers and ease the compliance process. The big thing is that the number of sections in the new Income Tax Bill 2025 has been reduced from 819 to 536. In this, unnecessary exemptions have been eliminated and the total word count in the new bill has been reduced from 5 lakh to 2.5 lakh.
Special focus has been given to technology-driven assessment in the new Income Tax Bill (New Income Tax Bill 2025)
By simplifying tax laws, the government is trying to make businesses focus on growth and not on tax planning. A key feature of this new Income Tax Bill 2025 is that it has a special focus on technology-driven assessment. After being introduced in the Lok Sabha, the new law will be sent to the Parliamentary Standing Committee on Finance for further deliberations. Well, it is claimed that this will strengthen India’s tax base and improve income stability in the long run. This will help in boosting the country’s economy. Let us tell you that in the new Income Tax Bill, more focus has been given on making things easier. Also, the assessment year will be replaced by the tax year.
The new tax law (New Income Tax Bill 2025) will be implemented from April 1, 2026
The new tax law (New Income Tax Bill 2025) will be implemented from April 1, 2026. Talking about tax relief, earlier the zero tax limit was Rs 7 lakh, which has been increased to Rs 12 lakh. This change will give great relief to the middle class, as their taxable income will be taxed less than before. Of course, middle class people will get relief due to income up to Rs 12 lakh being tax free. Apart from this, tax filing will be easier, paperwork will be reduced and online tax return filing will be promoted. The new resolution mechanism will resolve tax disputes quickly. Not only this, digital payments and business will get a boost due to this bill.
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These are the proposed reforms in the new Income Tax Bill (New Income Tax Bill 2025)
- The term tax year will be used in place of assessment year in the new bill.
- There will be a period of 12 months from 1 April to 31 March
- The legal terms in the new bill have been simplified and shortened, which will make it very easy to understand.
- The number of chapters in the bill is 23, but the sections have increased from 298 to 536.
- The number of schedules has increased from 14 to 16.
- There are strict provisions on digital transactions and crypto assets.
- Emphasis on increasing transparency and preventing tax evasion.
- The new bill also includes the Taxpayers Charter, which will protect the rights of taxpayers.
- If a new business or work is started, its tax year will start from that day and end at the end of the same financial year.
- Complex explanations and provisions present in the old law have been removed, making it easier to understand.
- Under the new bill, virtual digital assets such as cryptocurrencies will now be considered under undisclosed income.
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