New Income Tax Law: Small business owners & professionals set to get relief, says sources

The new Income Tax Bill—or the Income Tax Bill 2025—is likely to provide relief to small business owners and professionals, sources told Zee Business. Additionally, businesses with annual turnovers of up to Rs 5 crore will not be required to be audited under tax laws, the sources said. The new Income Tax Bill, set to replace the Income Tax Act of 1961, is set to be tabled in Parliament on Thursday. The new Bill—which will become the Income Tax Bill 2025 once cleared—is aimed at simplifying the existing tax law, doing away with a long chain of amendments and subsequent complexities over the years.

The New Income Tax Bill—or the new direct tax code—is part of the Narendra Modi administration’s ambitious goal of overhauling and simplifying the country’s existing tax structure in order to ease tax compliance for its growing tax base.

Sources also told Zee Business the following:

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• The Income Tax Bill 2025 will do away with the requirement of tax audits for businesses with turnovers of up to Rs 5 crore.
• It will also double the existing annual threshold beyond which professionals are required to undergo mandatory tax audits to Rs 1 crore.
• The new Income Tax Bill will seek to simplify tasks such as digital tax filing and faceless processing.
• It will completely switch to a digital verification process, in a drastic shift from manual checks.
• It will enable income tax assessees to verify their income tax returns before submission.
• It will contain provisions for heavy penalties for the income tax assessees filing misleading or incorrect income tax returns.
• The Income Tax Bill 2025 will shift the existing deadline for submitting the tax audit report to October 31 from the current September 30.
• In case of tax audit, the last date for filing the income tax return will be revised to November 30 from the current October 31.

Among the key likely changes in the new law is the replacement of the term "previous year" with "tax year", thereby doing away with the concept of the assessment year. Currently, taxes applicable to the income earned in the previous year are paid in the next year, known as the assessment year.

The Income Tax Bill 2025 reportedly comprises 536 sections, as against the 298 sections in the current Income Tax Act 1961.