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PremiumNew Income Tax Bill 2025 Highlights: Union Finance Minister Nirmala Sitharaman presented the new Income-Tax Bill 2025 in Lok Sabha on Thursday. The I-T bill was announced during her Budget speech on February 1 and was approved by the Cabinet on February 7.
Following the introduction, FM Nirmala Sitharaman urged the Speaker to sent the bill the Parliament's Standing Committee on Finance for further discussions. Before making the rounds of both Houses of Parliament again.
Spanning 622 pages, the new I-T 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 new Income-Tax Bill is “crisper and simplified". It has replaced the term ‘previous year’ from the 60-year-old Income Tax Act, 1961, with ‘tax year’ and done away with the concept of ‘assessment year’.
Once the New Income Tax Bill is passed in the Parliament, it will be referred to the Parliamentary Standing Committee on Finance, which will start the consultation process.
The tax slabs are as follows:
Finance Minister Nirmala Sitharaman gave relief to middle class by raising exemption limit and rejigging slabs in the Union Budget. For salaried employees, this nil tax limit will be ₹12.75 lakh per annum, after taking into account a standard deduction of ₹75,000.
The new income tax bill has been introduced to replace nearly 60-year-old Income Tax Act, 1961. The proposed bill will include simplified language to benefit taxpayers and may reduce the number of sections by 25-30 per cent in an effort to simplify tax rules and its clauses.
New Income Tax Bill 2025: The new Income Tax Bill, 2025, included term ‘virtual digital space’. According to ANI, the bill includes the term in the clause relating to search and seizure cases.
New Income Tax Bill 2025: Several opposition leaders on Friday accused that the Centre had overlooked the demand of non-BJP ruled states. Congress MP Pramod Tiwari later alleged "step-motherly" treatment against opposition-ruled states. The allegation has been rejected by the government
New Income Tax Bill 2025: The government consulted taxpayers, businesses, industry associations, and professional bodies. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices, according to the Finance Ministry.
New Income Tax Bill 2025: According to the Finance Ministry, the new bill aims to:
- Eliminating intricate language to enhance readability.
-Removing redundant and repetitive provisions for better navigation.
-Reorganizing sections logically to facilitate ease of reference.
New Income Tax Bill 2025: During a search, tax authorities will have access to email servers, online investment accounts, trading and bank accounts, social media accounts and digital application servers of taxpayers under the new Income Tax Bill, reported Reuters.
New Income Tax Bill 2025: According to the FAQ issued by the I-T department, the number of chapters in the new I-T bill has been halved to 23 from 47 in the previous Act. The new Income Tax Bill has 57 tables, compared to 18 in the existing Act, and it removes 1,200 provisions and 900 explanations.
New Income Tax Bill 2025: The new bill, which was introduced in the Lok Sabha, has a word count of 2.6 lakh, less than 5.12 lakh in the previous I-T Act.
New Income Tax Bill 2025: The new Income Tax Bill aims to achieve tax certainty by minimising the scope of litigation and fresh interpretation, the Income Tax department stated.
New Income Tax Bill 2025: Clauses 11 to 154 under the new consolidated certain deductions and introduces new provisions to support startups, digital businesses, and renewable energy investments.
New Income Tax Bill 2025: “The Income-Tax Bill 2025, introduced by the Finance Minister, aims to simplify and modernize India’s tax system without making significant changes to the existing law. It focuses on streamlining the existing Income tax Act. The government will seek feedback before finalizing it and the new law is expected to apply from the tax year starting April 1, 2026. Once approved by the President, the government will update tax rules, forms and IT systems accordingly. Businesses will also need to update their systems at the same time. Overall, this marks a transition towards a more modern tax system for both taxpayers and the administration," according to Sanjay Tolia, Partner, Price Waterhouse &Co LLP
New Income Tax Bill 2025: “From ‘tax dispute resolution perspective’, the new Bill specifically states that ‘Dispute Resolution Panel’ will be required to pass a speaking order with reasons to decide each and every objections/ grounds taken by taxpayer," according to Sanjiv Sanghvi, Partner at Khaitan & Co.
New Income Tax Bill 2025: “In the past few years, a number of laws have undergone a revamp eg. Companies Act, GST Law etc. Accordingly, there was a very high expectation from the Finance Minister to revamp the Income Tax Act as well which has been in existence for the past 6 decades. However, the new tax bill is only a simplified version of the current Act with no policy level changes or change in tax rates," according to Anita Basrur, Partner, Sudit K. Parekh & Co. LLP.
New Income Tax Bill 2025: According to Sanjiv Sanghvi, Partner at Khaitan & Co, “One interesting feature of the Bill is that some of key provisions like TDS/TCS or exempt income are summarised in tabular form, which saves the trouble of looking into multiple provisions of the section."
New Income Tax Bill 2025: The previous law, under Sections 11 to 13, provided income tax exemptions for certain charitable purposes but had limited compliance guidelines. In Clauses 332 to 355, the new bill establishes a more detailed framework, clearly defining taxable income, compliance rules, and restrictions on commercial activities.
New Income Tax Bill 2025: In Clauses 67 to 91, the new income tax bill introduces provisions for virtual digital assets and updates beneficial tax rates to cover digital assets in a proper tax framework. It also defines "virtual digital asset" and “electronic mode."
New Income Tax Bill 2025: The time frame for filing updated returns is extended from two to four years, which gives taxpayers an extended period to rectify any omissions or errors.
New Income Tax Bill 2025:"Due to the concept of "Tax Year" there might be questions whether the period 1.4.26 to 31.3.27 would be in conflict between old and new acts. However, this is not to be as It will be Assessment Year 2026-27 of the Income-tax Act, 1961 and will pertain to the income of a taxpayer for the previous year 2025-26 and not to the income of the financial year 2026-27; It will be the tax year 2026-27 of the new Act. It will pertain to the income of a taxpayer for the financial year 2026-27," according to Vivek Jalan, Partner - Tax Connect Advisory Services LLP
New Income Tax Bill 2025: The new bill aims to reduce the number of sections by 25-30 per cent, making the tax code more straightforward and user-friendly.
The bill changes certain deductions and exemptions. Earlier, Sections 10 and 80C to 80U of the Income Tax Act of 1961 allowed deductions for investments, donations, and specific expenses.
New Income Tax Bill 2025: Several tax concepts such as indirect transfers, GAAR, capital gains, SEP, taxation of royalty/ FTS, tax rates and residential status remain largely unchanged.
New Income Tax Bill 2025: “The Income-Tax Bill, 2025, represents a significant modernization of India’s tax regime, proposed to be effective from the tax year 2026-27. It reworks the existing Income-tax Act, 1961, by removing provisos and explanations, consolidating TDS provisions into a single clause, extensive use of tables for better readability, and removing redundant sections. This restructuring transforms 298 sections (effectively 819 sections) into 536 clauses, thereby enhancing clarity," according to Shaily Gupta, Partner at Khaitan & Co.
New Income Tax Bill 2025: A time limit has been set for disposing appeals at the first appellate authority level to address backlog issues.
New Income Tax Bill 2025: The proposed legislation is streamlined to 566 pages, down from over 800 in the current Act.
New Income Tax Bill 2025: According to Munjal Almoula, Head of Tax & Regulatory Services, BDO India, “As was expected, the New Income Tax Bill doesn’t seek to introduce any additional tax burden on taxpayers. What the bill attempts to do is simplify the language contained in the Income-tax Act of 1961, provide greater clarity through explanations and provides more transparency to taxpayers."
New Income Tax Bill 2025: According to Riaz Thingna, Partner - Tax, Grant Thornton Bharat, “The new Bill with simpler language, use of tables, formulae, lesser sections and sizably reduced pages will address the challenges that were being faced by taxpayers in comprehending and complying with the existing Income -tax Act, which has become complex due to piecemeal changes that have happened over past six decades."
New Income Tax Bill 2025: According to Riaz Thingna, Partner - Tax, Grant Thornton Bharat, “Income tax Bill 2025 that has been tabled in the parliament today takes into consideration several suggestions of taxpayers on simplification of the statute. There is an attempt to simplify the language by using shorter sentences, removing provisos and explanation and deleting the obsolete provisions. It is heartening to see use of tables with notes and use of formulae, which will make it easier for taxpayers to comprehend and comply with law. As it is effective from 1 April 2026, there will be adequate time available to stakeholders to assess and imbibe these changes."
New Income Tax Bill 2025: The bill will replace terms such as "assessment year" and "previous year" with “tax year" to simplify language.
New Income Tax Bill 2025: After tabling the new bill, FM Nirmala Sithraman urged the Speaker to refer the Income Tax Bill 2025 to the Select Committee of Lok Sabha.
New Income Tax Bill 2025: On February 1, Finance Minister Nirmala Sitharaman informed that the new income tax bill will introduced in the Parliament while highlighting the tax reforms the NDA government undertook over the years.
"Over the past 10 years, our Government has implemented several reforms for the convenience of taxpayers, such as (1) faceless assessment, (2) taxpayers charter, (3) faster returns, (4) almost 99 per cent returns being on selfassessment, and (5) Vivad se Vishwas scheme. Continuing these efforts, I reaffirm the commitment of the tax department to trust first, scrutinize later. I also propose to introduce the new income-tax bill next week," Sitharaman said in the budget speech.
New Income Tax Bill 2025: Congress MP Manish Tewari raised questions on the newly introduced Income Tax Bill, saying that the proposed legislation is more complex than the existing one.
"The Union Finance Minister had said that the new Income Tax Bill will be simpler than the previous bill. In the previous Bill, there were 296 sections. In the new Bill, there are more than 500 sections. In the previous Bill, there were 5 schedules. In the new Bill, there are 14 schedules," Tewari told ANI.
"The bill, which should have been more simple than the previous one, is more complicated," he added.
New Income Tax Bill 2025: Bharatiya Janata Party (BJP) MP Tejasvi Surya compared the new Income Tax Bill with the goods and services taxes in terms of bringing simplicity to the regime.
"We did the same for India's indirect taxation system through GST... From the perspective of the common man, it has brought down the prices of goods and services, which was not the case under the earlier VAT regime. The new Income Tax Bill is going to make the lives of India's taxpayers much easier," Tejasvi Surya told ANI.
New Income Tax Bill 2025: Bharatiya Janata Party (BJP) MP Tejasvi Surya appreciated the new Income Tax Bill.
"For almost 60 years, India's Income Tax Act was not reviewed. Like many other areas where PM Narendra Modi's government has brought tremendous reforms, India's Direct Taxation System will also be overhauled to make it modern, simple, rational, and more compliance-friendly," Surya told ANI.
New Income Tax Bill 2025: House adjourned till March 10, 2025 for second part of the Parliament's Budget session
Union Finance Minister Nirmala Sitharaman has tabled the new income tax bill 2025 in Lok Sabha during the Budget session of Parliament today.
Spanning 622 pages, the new I-T 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.
Once the New Income Tax Bill is passed in the Parliament, it will be referred to the Parliamentary Standing Committee on Finance, which will start the consultation process.
FM Sitharaman moves new Income Tax Bill 2025 in Parliament
New Income Tax Bill LIVE: Current Bill is expected to undergo a lot of changes since the income tax portal is still inviting suggestions from people with regards to the new tax bill under the section ‘new’.
New Income Tax Bill LIVE: The new income tax bill is expected to use formulas rather than complicated definitions for various concepts like capital gains, cost of acquisition and inventory valuation.
This move is likely to help reduce errors and prevent differing interpretations, people aware of the development told Mint.
New Income Tax Bill LIVE: The new income bill turning into the law is set to come into effect from April 1, 2026. The rules will be put in place after the Act is notified.
New Income Tax Bill LIVE: More than 100 officers reportedly contributed to the drafting of the new Bill, offering their experience in tax administration.
“There are no jargons in the new law; there won't be any scratching of the head over understanding the provisions. There will be fewer errors while filing the return, and taxpayers will hopefully have a smoother experience. The new tax regime is the default option. So, those taxpayers who want to opt for the old tax regime will have to opt out of the new regime," says CA Chirag Chauhan, a Mumbai-based chartered accountant.
In the July 2024 Budget, the government proposed a comprehensive review of the Income-tax Act of 1961. The purpose was to make the Act concise and lucid and reduce disputes and litigation.
Sitharaman had said in her budget speech on February 1 that the bill will be soon introduced in Parliament.
Finance Minister Nirmala Sitharaman in her Budget speech on February 1 said that the Income Tax Bill will be soon introduced in Parliament.
"Over the past 10 years, our government has implemented several reforms for the convenience of taxpayers, such as:
(1) faceless assessment,
(2) taxpayers charter,
(3) faster returns,
(4) almost 99 per cent returns being on selfassessment, and
(5) Vivad se Vishwas scheme.
Continuing these efforts, I reaffirm the commitment of the tax department to trust first, scrutinize later. I also propose to introduce the new income-tax bill next week," Sitharaman had said.
The new income tax bill has been introduced to replace nearly 60-year-old Income Tax Act, 1961. The proposed bill will include simplified language to benefit taxpayers and may reduce the number of sections by 25-30 per cent in an effort to simplify tax rules and its clauses.
“The Current Income Tax Act has approximately 931 sections and 14 schedules. The new bill has significantly reduced the number of sections to 536, with 16 schedules. The above is in line with the govt. determination to simplify the statute," said Vivek Jalan, Partner - Tax Connect Advisory Services LLP.
“The term Assessment Year and Previous Year has been proposed to be replaced with tax year, to end sixty year confusion. Tax year has been defined as the twelve months period of the financial year commencing on the 1st April," he added.
Sandeep Agrawal, Director and Founder of Teamlease Regtech noted that the new income tax bill is set to reduce 50 per cent of the current provisions. “… marks a significant step towards simplifying tax laws and replacing the six-decade-old Income Tax Act of 1961. The bill is expected to make compliance easy for taxpayers and administrators alike, ultimately helping to cut down on tax-related litigation," as per Agrawal.
He added that the no-tax limit being raised from ₹7 lakh to ₹12 lakh will benefit the middle class, but for those earning above ₹12.75 lakh staying in the old regime might still be beneficial.
“Further, the extended window for filing Updated Income Tax Returns (ITR-U) from two years to four years, would give taxpayers more time to rectify errors and declare missed income, ensuring better compliance," he added.
Speaking to the media on February 8, Sitharaman said: “…the New Income Tax proposal, I hope to have it introduced in the Lok Sabha in the coming week. Post that it will go to a committee. The bill will again go to the Cabinet after the parliamentary committee gives its recommendations on it. After Cabinet approval, it will again be introduced in Parliament. I still have three critical stages to pass through."
The new I-T Bill 2025 or new direct tax code is part of a larger effort to reform the India's tax system. It aims to overhaul the existing tax structure to make it more streamlined and transparent.
Parliament has been adjourned. Finance Minister Nirmala Sitharaman will introduce new I-T Bill at 2 pm today once Lok Sabha resumes session.
Lok Sabha adjourned till 2 pm
The Bill is being tabled 12 days after Union Finance Minister Nirmala Sitharaman presented Budget 2025. The Budget session of Parliament began on January 31 and will take place in two legs.
The first leg . The first leg is scheduled to end today. The second part of the session will commence on March 10 and conclude on April 4.
