PHOTO DIVISION (PIB)
New Income Tax Bill 2025 Introduced in Parliament
Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in Parliament, marking a significant step towards tax reforms in India. The proposed legislation aims to replace the Income Tax Act of 1961 with a more structured and modern framework, enhancing compliance and transparency.
Key Features of the Income Tax Bill 2025
The new bill comprises 536 clauses and 23 chapters, streamlining tax provisions for better clarity. It introduces a revised format for tax calculations and eliminates redundant provisions from the existing law. Additionally, the terms “assessment year” and “financial year” have been replaced with “tax year,” defined as a 12-month period beginning on April 1.
Another major change is the consolidation of provisions related to salaries and perquisites, making it easier for taxpayers to understand their obligations. The bill also presents tax rates and critical financial information in tabular formats, simplifying complex computations.
Focus on Simplification and Modernization
The proposed bill seeks to make India’s tax system more accessible by eliminating outdated legal jargon and introducing structured provisions. Specific formulas for tax calculations have been incorporated to improve accuracy and ease of compliance.
Despite these efforts, some tax experts believe that the bill does not significantly simplify the taxation process but rather reorganizes existing provisions under a new framework. Concerns have been raised about the continued complexity of tax laws, which may still pose challenges for businesses and individuals.
Implementation Timeline and Next Steps
If approved, the Income Tax Bill 2025 is expected to take effect from April 1, 2026. It will be reviewed by the Parliamentary Standing Committee on Finance before being tabled for further discussion and potential amendments.
This legislative initiative reflects the government’s commitment to improving tax compliance and efficiency. The proposed changes aim to modernize India’s tax laws while ensuring a smooth transition for taxpayers. The final implementation will depend on parliamentary discussions and industry feedback in the coming months.
