New Income Tax Bill: Union Finance Minister Nirmala Sitharaman is set to introduce the New Income Tax Bill, 2025, in the Lok Sabha on Thursday (February 13). The bill aims to consolidate and amend the existing income-tax laws inorder to bring potential changes to the country’s tax framework.
The proposed legislation is expected to streamline tax regulations, enhance compliance, and possibly introduce new provisions in line with evolving economic policies. The move comes as part of the government’s broader efforts to modernise and simplify the taxation system.
Here are some key points of New Income Tax Bill
- New Income Tax Bill will replace 298 sections and 14 schedules in the six-decade-old voluminous legislation.
- The 622-page new law will be enshrined in 526 sections, 23 chapters and 16 schedules.
- The bill introduces a new concept of ‘tax year’ as the 12-month period beginning from April 1.
- The bill seeks to replace the present concept of assessment and the previous year.
- The new bill will come into effect from April 1, 2026, after it is vetted by Standing Committee and cleared by Parliament.
- The new bill has omitted redundant sections, like those relating to Fringe Benefit Tax.
- The bill is free from ‘explanations or provisos’, thereby making it easier to read and comprehend.
- The bill uses shorter sentences and has been made reader-friendly with the use of tables and formulae.
- Tables have been provided for provisions relating to TDS, presumptive taxation, salaries, and deductions for bad debt .
- The ‘Taxpayer’s Charter’ has been included in the Bill which outlines the rights and obligations of the taxpayers.
- The bill replaces the term ‘previous year’ as mentioned in the Income Tax Act, 1961 with ‘tax year’.
New Income Tax Bill in Parliament Budget Session
Once introduced in the Lok Sabha, the bill will be sent to the Parliamentary Standing Committee on Finance for further deliberations. The Statement of Objects and Reasons of the new I-T Bill said that the Income-tax Act passed in 1961 has been subjected to numerous amendments since its passage 60 years ago. Tax administrators, practitioners and taxpayers had also raised concerns about the complicated provisions and structure of the Income-tax Act. Therefore, the government in the budget in July 2024 announced that a time-bound comprehensive review of the Income-tax Act, 1961 would be undertaken to make the Act concise, lucid, easy to read and understand.
The Income Tax Bill, 2025 comprises 536 sections, higher than 298 sections of the current Income-Tax Act, 1961. The existing law has 14 schedules which will increase to 16 in the new legislation. Finance Minister Nirmala Sitharaman had announced in Budget 2025-26 that the new tax bill will be introduced during the ongoing session of Parliament. Sitharaman had first announced a comprehensive review of the Income-tax Act, 1961 in July 2024 Budget.
(With PTI inputs)
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