New Income Tax Bill 2025: Finance Minister Nirmala Sitharaman has tabled the New Income Tax Bill in Lok Sabha on Thursday, comprising 536 clauses across 622 pages, with an aim to replace the existing 823-page law that has been in effect for 64 years. The New Income Tax Bill 2025, written in clearer language, eliminates the concept of “assessment year” and introduces “tax year” to align with the financial year.
The new 622-page Income Tax Bill 2025 and aims to replace the 60-year-old Income Tax Act of 1961 and once passed will be called the Income Tax Act, 2025. It is expected to take effect in April 2026.
The Income-tax Act of 1961, which has undergone numerous amendments over the years, is being replaced with the Income-tax Bill of 2025 to consolidate and update the law relating to income tax. The new bill aims to simplify and streamline the tax structure, making it easier to comprehend and comply with for taxpayers and administrators.
The bill introduces provisions for a faceless jurisdiction of income-tax authorities, enabling remote and digital tax administration. It includes measures for alternate dispute resolutions, such as a Dispute Resolution Committee and advance rulings, to facilitate efficient resolution of tax disputes.
The bill addresses avoidance of tax through measures like transfer pricing regulations and a General Anti-Avoidance Rule to prevent tax evasion; and mandates the deduction or collection of tax at source and advance payment to ensure timely tax collection.
It introduces special provisions for certain sectors, such as shipping companies, allowing them to opt for a tonnage tax scheme. It also introduces new tax regimes for individuals, Hindu Undivided Families (HUFs), and certain companies, including those engaged in manufacturing.
New Income Tax Bill 2025: Key Highlights
* The Income Tax Bill, 2025, features simplified language, eliminates unnecessary provisions and adopts concise sentences;
* No additional taxes are introduced in the Bill; it consolidates existing tax provisions from the Income Tax Act, 1961;
* Contains 536 sections, 23 chapters and 16 schedules within 622 pages, compared to the 1961 Act’s 298 sections, 23 chapters and 14 schedules;
* Implementation scheduled for April 1, 2026; regulations to be established after Act notification;
* Incorporates both traditional and new tax frameworks for individuals, HUFs and other entities;
* Introduces ‘Tax year’ concept, eliminates complex terms like ‘Previous year’ and ‘Assessment year’;
* Replaces ‘notwithstanding’ with ‘irrespective’ for clarity;
* Utilises tables and formulae instead of ‘explanations or provisos’;
* Incorporates Taxpayer’s Charter outlining rights and responsibilities;
* Includes specific provisions for calculating capital gains on market-linked debentures;
* Relocates income exclusions to Schedules for improved clarity;
* Consolidates salary deductions including standard deduction, gratuity, and leave encashment in a single section, rather than dispersing across multiple sections/rules.
New Income Tax Bill 2025 PDF: Read Full Text Here
Below is the New Income Tax Bill 2025 full text and document:
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