Finance Minister Nirmala Sitharaman on Wednesday (13 February 2025) tabled the much talked about New Income Tax Bill 2025 in Lok Sabha. The Bill will now be sent to the Parliamentary Standing Committee on Finance for further deliberations.
When Will New Income Tax Bill 2025 Come Into Force?
The revised tax framework is expected to come into force from April 1, 2026.
Will New Income Tax Bill 2025 Change The Existing Income Tax Slabs?
The bill will not change the existing tax slabs or review the tax rebate given. Instead, it aims to make the six-decade-old legislation reader-friendly.
New Income Tax Bill 2025 Vs Old Income Tax Act 1961: Ten Key Points To Know
1. A crispier and simplified Income Tax Bill 2025, having 536 sections, and 23 chapters running into 622 pages.
2. The Bill once enacted will replace six-decade old Income Tax Act 1961, which over the years became bulkier and complex with amendments.
3. The proposed law replaces the term ‘previous year’ as mentioned in the Income Tax Act, 1961 with ‘tax year’. Also, the concept of assessment year has been done away with.
4. Currently, for income earned in the previous year (say 2023-24), tax is paid in assessment year (say 2024-25).
5. This previous year and assessment year concept has been removed and only tax year under the simplified bill has been brought in.
6. 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.
7. However, the number of chapters have been retained at 23. The number of pages has been reduced substantially to 622, almost half of the current voluminous Act which includes amendments made over the last six decades.
8. When the Income Tax Act, 1961, was brought in, it had 880 pages.
9. As per the proposed law, clearer tax treatment on stock options (ESOPs) have been included for reduced tax disputes and includes judicial pronouncements of the last 60 years for more clarity.
10. As per new law, the CBDT can now frame tax administration rules, introduce compliance measures, and enforce digital tax monitoring systems without requiring frequent legislative amendments as per the Clause 533.
