New Income Tax Bill: Finance Minister Nirmala Sitharaman introduces I-T Bill 2025 in Parliament today; here's what you need to know
The present Income Tax Act contains 52 chapters and 1,647 pages. The revised bill is projected to be far shorter, with only 23 chapters, 536 sections, and 622 pages.
The Income Tax Bill 2025 has been introduced in Parliament today, February 13. It will replace the current law from 1961. If approved, the bill is scheduled to go into effect on April 1, 2026. The new bill is expected to simplify the language of the existing Income Tax Act. Here's what you need to know:
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New bill makes tax laws easier
The new I-T bill has made tax laws easier.
Tax year
Many taxpayers confuse the assessment year and financial year (previous year). The concept of ‘tax year’ has been introduced replacing ‘previous year’ and ‘assessment year’.
Assessment year
Income earned in the ‘previous year’ is currently being assessed in the ‘assessment year’.
Shorter tax law
The present Income Tax Act contains 52 chapters and 1,647 pages. The revised bill has been made shorter with only 23 chapters, 536 sections, and 622 pages.
Schedules
The new bill has 23 chapters, divided into 536 sections and 16 schedules, over 600 pages.
Clearer tax treatment on ESOPs
In the new I-T Bill, a clearer tax treatment is set to be defined for lowering the number of tax disputes.
How will the old and new provisions co-exist?
Various facets of compliance for the respective years have been mentioned in the Repeals and Savings clause in the Bill, which will safeguard all rights and liabilities accrued under the old law.
Purpose of new I-T bill
The Finance Minister in the budget speech in July 2024 stated that the purpose of the comprehensive review of the Income-tax Act, 1961, is to make the Act “concise, lucid, easy to read and understand”.