New Income Tax Bill: 10 points which all taxpayers should know. Check here

The New Income Tax Law is set to become a reality soon. Union Finance Minister Nirmala Sitharaman will table the new legislation in Parliament on Thursday.

Upon accessing the first draft of the bill, we have realised that this is quite in line with what is being expected from it. It is certainly shorter, succinct and simpler to read piece of law. 

“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.

These are key points to know

1. Fewer pages: Income Tax Act 1961 has 823 pages as amended in 2024 where as the new income tax bill is spread across 622 pages. So it is shorter by 201 pages.

2. Number of sections: There are 536 sections, 23 chapters and 16 schedules. Despite having more number of sections, it is shorter because there are fewer explanations and provisos. 

3. Standing committee: Once this is passed in the Parliament, it will be referred to the Parliamentary Standing Committee on Finance, which will start the consultation.

4. Old tax regime: Although the new tax regime is the default regime, old tax regime continues in the new legislation as well.

5. Limits raised: The 44AD limit has been raised for business from 2 crore to 3 crore, whereas for professionals, it has been raised from ₹50 lakh to ₹75 lakh.

6. Virtual digital assets: Virtual digital assets (or cryptocurrencies) are put under the category of assets which also include property, jewellery, painting, drawings and shares.

7. Audit by CAs: There were speculations earlier that the scope of tax audit would be extended to include CS and CMA as well. However, section Sec 515 (3)(b) mentions that the accountant means chartered accountant. This has apparently given a sigh of relief to the CA community.

8. Tax year: The assessment year will now be known as ‘tax year’ and previous year becomes financial year. 

9. Capital gains: Long-term capital gains (LTCG) and short-term capital gains (STCG) remain the same as when they were introduced last year.

10. Presumptive taxation: The new income tax bill finally puts an end to the debate on 44AD/44AE/44ADA issue which was reportedly a matter of big concern among professionals. It has now added 'Profit claimed to have been actually earned' in the manner of computing profits under sections 44AD/44AE/44ADA