The new Income Tax Bill 2025 is likely to be introduced in Parliament on February 13, 2025.
The bill aims to simplify the existing Income Tax Act, 1961, making tax laws more accessible to the common man and reducing litigation. Since its enactment, the Income Tax Act, 1961 has undergone modifications through 66 Budgets, including two interim budgets.
Here are 10 unique points that you must know in respect of Income Tax Bill 2025:
1. Introduction of ‘Tax Year’ – No More ‘Previous Year’ & ‘Assessment Year’
The confusing terms Previous Year and Assessment Year have been replaced with a single Tax Year for better clarity.
2. More Sections, But Simpler Language
The new bill has 536 sections compared to 298 sections in the 1961 Act, but uses shorter sentences, fewer legal jargons, and simplified provisions.
3. Tables & Formulae for Easy Understanding
Complex provisions related to TDS, presumptive taxation, salaries, and deductions are now presented in tabular format for easier reference.
4. All TDS Provisions Consolidated in One Place
Instead of scattered TDS provisions across multiple sections, the new bill brings them together under a single clause with structured tables.
5. Removal of Redundant & Archaic Provisions
Outdated provisions like Fringe Benefit Tax (FBT), which was abolished in 2009, have been completely removed.
6. Introduction of ‘Taxpayer’s Charter’ for Transparency
The bill includes a Taxpayer’s Charter, outlining rights and obligations, aiming to improve trust between taxpayers and the tax department.
7. Judicial Precedents Incorporated to Reduce Litigation
The bill includes important judicial pronouncements from the last 60 years, providing better clarity and reducing legal disputes.
8. Income Exemptions Shifted to Schedules
To simplify the Act, income categories that are not taxable are now listed in dedicated schedules instead of being mixed in the main sections.
9. Clear Tax Treatment for Employee Stock Options (ESOPs)
The new bill provides a well-defined tax framework for ESOPs, addressing a key issue that previously led to disputes.
10. Expected Implementation from April 1, 2026
Once passed, the new Income Tax Bill, 2025 is expected to come into effect from the financial year 2026-27.
