Income Tax: Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in the Lok Sabha, which aims to simplify the laws. In such a situation, let us tell you that after the implementation of the new tax bill, taxpayers will have to be ready for the changes, but it will take time to become a law-
New Income Tax Bill: Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in the Lok Sabha, which aims to simplify the laws. This new law will replace the Income Tax Act 1961, which has become old and complex. The government aims that the new bill will make it easier for taxpayers to understand and follow the rules, bringing transparency and efficiency to the tax system.
Taxpayers will have to be prepared for the changes once the new tax bill is implemented, but it will take time to become a law. The government has decided to form a select committee on this bill, which will submit its report on the first day of the next session. At present, the bill has been sent to the select committee. Therefore, taxpayers will have to wait patiently for the changes and keep an eye for further updates.
Section 80C now in clause 123-
It is not possible for any taxpayer to be unaware of Section 80C of Income Tax. Equity-linked Saving Scheme (ELSS), Public Provident Fund (PPF), life insurance premium, National Pension System (NPS) or other tax saving deposits come under this section. Under this, exemption of up to Rs 1.5 lakh is available.
In the new bill, this exemption is under section 123-
In the new bill, such deductions will be placed under section 123. According to the bill, “Any individual or a Hindu Undivided Family (HUF) shall be entitled to get a deduction of the entire amount paid or deposited in that tax year. However, this amount will be up to a maximum of Rs 1,50,000.
According to Mayank Mohanka, founder-director of tax consultancy firm TaxAaram.com, section 123 given in the new income tax bill will be similar to section 80C of the current Income Tax Act, 1961. It should be read along with Schedule XV, which gives detailed information about the tax exemption available under section 80C.
Will be implemented from 1 April 2026-
The new Income Tax Bill 2025 aims to simplify the tax process. The bill reduces the number of tax sections from 819 to 536 and removes unnecessary exemptions. The number of words in the bill has also been reduced from 5 lakh to 2.5 lakh, making it easier to understand. ‘Assessment Year’ will be replaced by ‘Tax Year’. The new law will come into effect from April 1, 2026. Its aim is to make the tax system simple and effective.
After being introduced in the Lok Sabha, the new law will be referred to the Parliamentary Standing Committee on Finance for further deliberations. The bill will not change the existing tax slabs or reduce the tax exemptions offered. Instead, the new law aims to make the six-decade-old law compatible with the current times.
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