How the New Income Tax Bill, 2025 Impacts Your Finances: 5 Key Questions Answered
Thank you for reading this post, don't forget to subscribe!The Indian government has introduced the Income-tax Bill, 2025, a landmark piece of legislation aimed at replacing the 65-year-old Income-tax Act, 1961. Introduced by Finance Minister Nirmala Sitharaman, the new bill incorporates recommendations from a parliamentary select committee to simplify tax laws, modernize compliance, and reduce legal disputes.
The bill’s core goals are to enhance clarity, strengthen faceless administration through digital processes, and unify the “tax year” to streamline assessment timelines. It is set to take effect on April 1, 2026, providing a buffer for taxpayers and businesses to adapt.
Here are the key changes and how they could affect your finances:
1. Have the Income Tax Slabs Changed?
The tax slab rates under the new regime remain unchanged. The government’s focus is on structural changes, particularly with tax rebates. While a 100% tax rebate (up to Rs 12,500) is still available for incomes up to Rs 5 lakh, a new “tapering rebate system” has been introduced, providing relief of up to Rs 60,000 for incomes up to Rs 12 lakh.
2. What Are the Key Changes to Deductions?
The bill clarifies several important deductions, many of which align with existing provisions:
- House Property Deduction: A 30% deduction on house property income is permitted after municipal taxes have been subtracted.
- Home Loan Interest: Interest on pre-construction home loans can now be deducted in five equal installments after completion, applying to both self-occupied and rented properties.
- Commuted Pension: This deduction is now explicitly available to both employees and non-employees who receive a commuted pension from a listed fund.
3. What’s New for Capital Gains and Digital Assets?
The bill overhauls the rules for capital gains, with a specific focus on modernizing the framework. Notably, it includes clear provisions for taxing cryptocurrencies and other digital assets as capital gains.
4. Can I Still Get a Refund if I File a Late Return?
The revised bill addresses this key concern. While the original draft had a provision that could have blocked refunds for late filers, the new version removes this and restores the ability to claim a TDS refund even if a return is filed beyond the original deadline.
5. When Will the New Law Come into Effect?
The Income Tax Bill, 2025 is scheduled to become effective from April 1, 2026. This is meant to give everyone ample time to prepare for the new rules and procedures.
