Sitharaman to present Income Tax Bill 2025 today, aiming for simplicity, transparency
The Income Tax Bill 2025 will overhaul the existing Income Tax Act, which has been in place for over six decades;
Once introduced in the Lok Sabha, the bill will be sent to the Parliamentary Standing Committee on Finance for detailed scrutiny.
Finance Minister Nirmala Sitharaman
Guwahati, Feb 13: Union Finance Minister Nirmala Sitharaman is set to introduce the much-anticipated Income Tax Bill 2025 in Parliament on Thursday.
The new bill is designed to simplify the country’s tax framework, replacing complex terms like "assessment year" and "previous year" with the more straightforward term “tax year”.
In addition, the Bill eliminates numerous provisos and explanations, aiming to make the tax code more transparent and easier to understand for taxpayers.
The Income Tax Bill 2025 will overhaul the existing Income Tax Act, which has been in place for over six decades.
The new legislation will replace the current 298 sections and 14 schedules with a modern framework comprising 526 sections, 23 chapters, and 16 schedules, spread across a 622-page document.
Once introduced in the Lok Sabha, the bill will be sent to the Parliamentary Standing Committee on Finance for detailed scrutiny.
The proposed changes are set to come into effect on April 1, 2026, pending approval from the committee and Parliament. Once passed, the Bill will officially be known as the ‘Income Tax Act, 2025’.
Key changes
Introduction of ‘Tax Year’: The bill defines the tax year as a 12-month period beginning April 1, replacing the existing "previous year" and "assessment year" system. Currently, income earned in the previous year (e.g., April 2024 – March 2025) is assessed in the subsequent assessment year (2025-26). This concept has been removed for simplicity.
The bill is set to take effect from April 1, 2026, after being reviewed by the Parliamentary Standing Committee on Finance and receiving parliamentary approval.
Elimination of Redundant Provisions: Outdated sections, such as those related to the Fringe Benefit Tax, have been omitted.
Clearer Language: The bill replaces complex legal terms like notwithstanding with simpler alternatives like irrespective. It also introduces shorter sentences, tables, and formulae to enhance readability. Provisions related to TDS, presumptive taxation, salaries, and bad debt deductions have been structured in a tabular format for better clarity.
Taxpayer’s Charter: A dedicated taxpayer’s charter has been introduced, outlining the rights and responsibilities of taxpayers.
By streamlining the tax structure and removing outdated terminology, the bill aims to simplify tax compliance and improve transparency for taxpayers.
