Income Tax Bill 2025 Updates: The Income Tax Bill 2025 introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman has now been sent to the Select Committee of Parliament. After this, after getting approval from the Parliament, this new law will come into force from April 1, 2026 and will be effective from the financial year 2026-27.
The Income Tax Bill 2025 has been introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman. The new Income Tax Bill 2025 introduced by the central government is a big step towards making the existing tax law simple and transparent. Industry experts have given this information. This new bill will replace the old Income Tax Act 1961 and will reduce many complexities for taxpayers.
Experts believe that this will not only improve the tax system but will also increase the confidence of taxpayers and provide them relief.
Industry experts say that the new bill is a significant change in India’s tax law. It will replace the old Income Tax Act 1961. The new Income Tax Bill is 622 pages long. This will reduce the complexity of the old Income Tax and emphasis has been laid on simplification of laws, which the common man can easily understand.
Why is the new bill important?
The main objective of this bill is to simplify tax rules and promote digital monitoring. It includes simple and straightforward rules by removing complex provisions. Apart from this, tables and formulas have been used in the new bill, which will make it easier to understand any provision.
Deloitte India partner Rohinton Sidhwa says the new bill is an important step towards modernising India’s tax system and making it taxpayer friendly.
What will be different from the old law?
- ‘Assessment Year’ replaced by ‘Tax Year’ – In the new Income Tax Bill, complex terms like ‘Assessment Year’ and ‘Previous Year’ have been removed and replaced with ‘Tax Year’, which is in line with international standards. This will make the compliance process easier for taxpayers.
- Unnecessary sections removed – The old law of 1961 had more than 800 sections and sub-sections, which have been limited to 538. This will make the law easier to understand and follow.
- Use of Tables – The new bill presents key rules, timelines and tax rates in tabular form for easier reading and understanding.
- Use of digital technology – CBDT has been given the authority to formulate rules for digital tax monitoring and tax administration, which will make the tax collection and refund process more transparent.
How will taxpayers get relief?
- Less disputes and litigation: The new bill will work on the policy of ‘trust first, investigate later’. This will reduce unnecessary disputes between tax officials and taxpayers.
- Provisions in simple language: The new bill has been written in simple language by removing the legal language of the old Income Tax Act. This will make it easier for common people to understand it.
- Complete information in one place: In the current income tax law, the rules related to salary are written in different places, but in the new bill, they have been given in one place.
This will simplify the process of paying tax.
No change in tax slabs and rates: The new bill will retain the existing tax rates and does not propose to add any new tax categories.
When will the new income tax bill be implemented?
The Income Tax Bill 2025 introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman has now been sent to the Select Committee of Parliament. After this, after getting approval from the Parliament, this new law will come into force from April 1, 2026 and will be effective from the financial year 2026-27.
The new Income Tax Bill 2025 aims to make tax rules easier, transparent and dispute-free for taxpayers. Under the new rules, taxpayers will get the benefit of better clarity, less complexities and digital processing.
Himanshu Parekh, Partner, Tax, KPMG in India, said that a good aspect of the new bill is that it makes strategic use of tables and formulas, which will help simplify the interpretation of the provisions. The bill aims to reduce disputes and litigation while increasing the certainty of taxpayers. The government has focused on the philosophy of “trust first, investigate later” with the ideology of “minimum government and maximum governance” in this bill.
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