New Income Tax Bill 2025- The New Income Tax Bill 2025, is set to be presented in Parliament today (February 13). Its primary objective is to streamline taxation laws, which are currently regulated by the Income Tax Act of 1961, making them more accessible for the general public. However, how will this new bill benefit taxpayers?
The purpose of the new bill is to streamline taxation laws, which are presently regulated by the Income Tax Act, 1961.
As per multiple media reports, the new Income Tax Bill is set to be presented in Parliament today (February 13).
The 1961 Act, covering personal tax, corporate tax, securities, gifts, and wealth, consists of almost two dozen chapters and 298 sections. When first introduced, it spanned 800 pages.
How will the New Income Tax Bill 2025 help you?
Let’s start with a quick overview of the bill.
The bill consists of 536 sections, 23 chapters, and 16 schedules.
While the number of schedules has increased from 14 to 16, the number of chapters remains unchanged at 23.
However, the bill reduces the total page count to 622—almost half of the existing Act.
According to the Indian Express, the new Income Tax Bill 2025 simplifies the language of the law.
Additionally, it eliminates certain stipulations and explanations, making it more accessible for the general public.
For instance, the bill replaces the term ‘previous year’ with ‘tax year.’
It also eliminates the complex assessment year concept. Currently, income earned in the previous year (2023-2024) is taxed in the assessment year (2024-2025). The bill introduces the ‘tax year,’ defined as a 12-month period starting from April 1.
Additionally, redundant sections, such as those related to Fringe Benefit Tax, have been removed.
The term ‘notwithstanding,’ which was frequently used in the Income Tax Act, 1961, has been replaced with ‘irrespective’ in almost all instances.
The bill provides readers with tables and formulas for TDS, presumptive taxation, salaries, and bad debt deductions.
The proposed law clarifies the taxation of employees’ stock options (ESOPs).
It incorporates key judgments from the past 60 years to offer taxpayers greater clarity.
Additionally, the bill introduces a ‘Taxpayer’s Charter,’ which defines the rights and responsibilities of taxpayers.
Experts Opinions- New Income Tax bill 2025
Experts have commended the new income tax bill 2025.
Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, told The Times of India, “Now structured into 23 chapters with 536 sections and 16 schedules spanning over 600 pages, a quick review of the new bill highlights its comprehensiveness compared to the existing Income Tax Act, which has 298 sections and 14 schedules.”
“The new version eliminates explanations and provisos to make interpretation and understanding easier. Additionally, new concepts like ‘tax year’ have been introduced, replacing ‘previous year’ and ‘assessment year,'” he stated.
Jhunjhunwala also told Indian Express that income excluded from total income has now been moved to schedules.
“Deductions from salaries, including standard deduction, gratuity, and leave encashment, have been consolidated in one place rather than being spread across different sections and rules,” he added.
“This rise in the number of sections signifies a more organized approach to tax administration, integrating modern compliance mechanisms, digital governance, and simplified provisions for both businesses and individuals,” said Rajat Mohan, Senior Partner at AMRG & Associates, to PTI.
Sandeep Agrawal, Director and Founder of Teamlease Regtech, told Financial Express, “The new Income Tax Bill aims to reduce 50% of the existing provisions, representing a major step toward simplifying tax laws and replacing the six-decade-old Income Tax Act of 1961.”
Agrawal further stated, “The bill is expected to simplify compliance for both taxpayers and administrators, ultimately reducing tax-related litigation.”
Next Steps- New Income Tax Bill 2025
After its expected introduction in the Lok Sabha on Thursday, the bill will be referred to the Parliamentary Standing Committee on Finance for further review.
The Statement of Objects and Reasons of the new Income Tax Bill highlights that the Income Tax Act of 1961 has undergone numerous amendments over the past 60 years.
“As a result of these amendments, the fundamental structure of the Income Tax Act has become overburdened, making the language more complex, increasing compliance costs for taxpayers, and reducing the efficiency of direct tax administration,” it stated.
Tax administrators, practitioners, and taxpayers had expressed concerns over the complex provisions and structure of the Income Tax Act.
In response, the government announced in the July 2024 budget that a comprehensive, time-bound review of the Income Tax Act, 1961, would be conducted to make it more concise, clear, and easier to understand.
As a result, the Income Tax Bill, 2025, has been drafted to repeal and replace the existing Income Tax Act, 1961.
Finance Minister Nirmala Sitharaman, in the Budget 2025-26, stated that the new tax bill would be introduced during the current parliamentary session.
She had first announced the comprehensive review of the Income Tax Act, 1961, during the July 2024 budget.
To facilitate this process, the Central Board of Direct Taxes (CBDT) formed an internal committee to oversee the review, ensuring the Act becomes clearer, more concise, and easier to interpret. This aims to reduce disputes, minimize litigation, and provide greater tax certainty. Additionally, 22 specialized sub-committees were established to examine different aspects of the Income Tax Act.
Public feedback was invited in four key areas: simplifying language, reducing litigation, easing compliance, and eliminating redundant or outdated provisions.
The Income Tax Department received 6,500 suggestions from stakeholders as part of the review process.
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