On Monday, August 11, 2025, the Income Tax Bill, 2025, is scheduled to be tabled in the Lok Sabha. This bill aims to replace the Income Tax Act of 1961 with a simpler, more modern framework, with the new law set to take effect on April 1, 2026.
Thank you for reading this post, don't forget to subscribe!Key Highlights of the New Bill
- Simplified Structure: The bill aims to reduce the law’s length by nearly half, cutting sections from 819 to 536.
- Unified Tax Year: The concepts of “previous year” and “assessment year” will be merged into a single “tax year” to simplify the tax filing process.
- Digital-First Approach: The new law will introduce provisions for paperless documentation and modern dispute resolution to streamline compliance.
- Lower Litigation Risk: The bill will restore safeguards in anti-tax-avoidance provisions to help minimize unnecessary legal disputes.
- No Change in Tax Slabs: The current tax rates and slabs are expected to remain the same. The primary focus of this bill is on simplification rather than rate revision.
Relief Measures and Recommendations
The bill incorporates recommendations from a parliamentary select committee. These include:
- Extended Deductions: Homeowners may see extended deductions.
- Exemptions for Small Taxpayers: There will be exemptions for small taxpayers whose income is below the taxable limit.
- Clearer Tax Rules: The bill will provide clearer tax rules for research and development (R&D) and eco-friendly businesses.
