Income Tax Bill 2025 Details & Key Highlights of New Tax Law

Income Tax Bill 2025 Details: Key Changes and Highlights

The much-awaited Income Tax Bill 2025 was introduced in Parliament on February 13, 2025. This legislation marks a major shift in India’s taxation framework, aiming to modernize, simplify, and improve efficiency. The government has structured the bill to make tax laws more transparent and accessible for taxpayers and businesses.

The income tax bill 2025 details reveal a comprehensive overhaul, ensuring better compliance and alignment with global taxation standards. With its implementation set for April 1, 2026, taxpayers must understand the new provisions and their implications.

Effective Date and Transition Plan

One of the most crucial aspects of the income tax bill 2025 details is its effective date. The law will come into force on April 1, 2026, making the financial year 2026-27 the first period under the new regime. Until then, the existing Income Tax Act 1961 remains applicable.

For students appearing for professional exams like CA, CS, and CMA, the transition plan is as follows:

Exams until March 31, 2026: Based on the Income Tax Act, 1961.

Exams from April 1, 2027: Based on the Income Tax Bill 2025.

Objectives of the Income Tax Bill 2025

The government introduced the income tax bill 2025 details with three core objectives:

Modernization: Aligning tax laws with international standards.

Simplification: Making tax language clearer and more accessible.

Efficiency & Transparency: Reducing tax disputes and improving compliance.

To achieve these, the bill incorporates several significant amendments that taxpayers must understand.

Key Highlights of the Income Tax Bill 2025

1. Restructuring of Sections & Chapters

The previous Income Tax Act had 298 sections, which expanded to over 800 provisions due to various subsections. The Income Tax Bill 2025 streamlines this by restructuring the law into 536 sections and consolidating 47 chapters into 23, eliminating redundancies.

2. Reduction in Complexity and Length

The government has simplified the law by reducing its length and complexity:

Old Act: 5.12 lakh words

New Act: 2.6 lakh words

Additionally, the overall number of pages has been reduced by 200, making it easier for taxpayers to comprehend.

3. Clearer Tax Language

The income tax bill 2025 details emphasize clarity by simplifying legal jargon. Tax provisions now include tables and formulas, making tax calculations more accessible to both professionals and individuals.

4. Measures to Reduce Litigation

To prevent legal disputes, the new tax law incorporates key judicial precedents. This ensures better clarity in interpretation and reduces conflicts between taxpayers and authorities.

5. Introduction of 'Tax Year'

The traditional terms ‘Previous Year’ and ‘Assessment Year’ have been replaced with a single Tax Year (April 1 – March 31). This simplification enhances consistency and ease of understanding.

6. Continuation of Dual Tax Regimes

Contrary to expectations, both the old and new tax regimes will continue. Taxpayers can choose the system that benefits them the most.

7. Taxation of Virtual Digital Assets

A significant addition in the income tax bill 2025 details is the taxation of Virtual Digital Assets (VDAs) such as cryptocurrencies and NFTs. The new law ensures undisclosed digital income is brought under the tax net.

8. Retained Tax Slabs

The tax slab structure remains unchanged, as per the Union Budget 2025. Notably, individuals earning up to INR 12 lakh will have zero tax liability due to applicable rebates.

9. Unchanged Five Income Heads

The classification of taxable income remains the same:

Salary

House Property

Business/Profession

Capital Gains

Other Sources

10. Renumbering of Sections

For better organization, section numbers have been modified:

Salary Income: Sections 15-19 (earlier 15-17)

House Property: Sections 20-25 (earlier 20-27)

Business/Profession: Sections 26-66 (earlier 28-44)

Capital Gains: Sections 67-91 (earlier 45-55)

Other Sources: Sections 92-95 (earlier 56-59)

Download the Income Tax Bill 2025 PDF

For an in-depth understanding of the changes, taxpayers can download the Income Tax Bill 2025 PDF. This document offers detailed insights into the new tax regulations, ensuring compliance and strategic tax planning. Staying updated with the income tax bill 2025 details will help individuals and businesses navigate the evolving taxation landscape efficiently.