key differences between the Income-tax Act 1961 and Income Tax Bill 2025
Here is a comparison table summarizing the key differences between the Income-tax Act, 1961 and the proposed Income-tax Bill, 2025, based on the provided sources:
| Feature | Income Tax Act, 1961 | Income-tax Bill 2025 |
|---|---|---|
| Overall Structure | Complex and lengthy with numerous amendments, provisos, and explanations. | Concise, lucid, and easier to understand with simpler language and a more organized structure. |
| Number of Chapters | 47 | 23 |
| Number of Sections | 819 effective sections, although the Act itself mentions sections only up to 298 | 536 |
| Number of Words | 5.12 lakhs | 2.60 lakhs |
| Provisos & Explanations | Approximately 1200 provisos and 900 explanations | Removed and their content incorporated into sub-sections or clauses. |
| Drafting Style | Traditional legal language; lengthy sentences. | Simpler language; shorter sentences; use of tables and formulas for clarity; enumerated sections. |
| “Previous Year” & “Assessment Year” | Separate concepts with different time periods, often creating confusion. | Replaced by the term “tax year,” which aligns with a 12 month period contained in a financial year. The term financial year is still used for procedural purposes, like filing deadlines. |
| Exemptions (Section 10) | Contained in a single section with numerous clauses, sub-clauses, provisos, and explanations (around 140 clauses). | Moved to six different schedules, with income, eligible persons, and conditions presented in tables. |
| Non-Profit Organizations | Different terms used across various provisions, such as ‘trust’ and ‘institution.’ | Consolidated under the term ‘registered non-profit organization‘ to avoid confusion. |
| Salary Provisions | Provisions spread across multiple sections and chapters. | Consolidated into one chapter for ease of understanding, with deductions included in the same chapter. |
| Business & Profession | Complex sections with cross-references and repetitive information. | Sections reorganized, similar provisions grouped together, with language simplified and information presented in tables. |
| TDS/TCS Provisions | 43 sections specifying sums liable for TDS, with varying rates and thresholds. | Merged into a single section with tables specifying rates for residents, non-residents, and other persons, plus a table for cases with no TDS. |
| Chapter VIA Deductions | Provisions were in various sections with multiple provisos and explanations. | Provisos and explanations integrated into main sections, complex sections streamlined, and some details moved to schedules. Sections 80TTA and 80TTB merged. |
| Assessment Procedures | Provisions for assessments and reassessments were presented in a lengthy, complex manner. | Sections for assessment and reassessment have been converted into tabular formats for easier readability; faceless assessment has been simplified. |
| Redundant Provisions | Many redundant provisions due to amendments and policy changes. | Removed to streamline the act and reduce its size. |
| Use of Tables | Limited use. | Extensive use of tables to present information in a concise and user-friendly format. |
Additional Key Points:
- The new bill aims to be more user-friendly, especially for new taxpayers, by simplifying complex concepts and language.
- Many procedural aspects have been moved to Rules, allowing the main body of the bill to focus on core principles.
- The bill incorporates amendments proposed up to the Finance Bill 2025.
- No changes in tax rates or major policy changes have been introduced, but the bill includes all amendments proposed in the Finance Bill 2025.
- The concept of ‘tax year’ has been introduced, replacing ‘previous year’ and ‘assessment year’.
- The new bill intends to provide more certainty and reduce litigation, particularly in deeming provisions.
- The changes in the bill are not meant to alter tax liability, but to simplify procedures and understanding.
- The new bill includes a “Repeals and Savings” clause to protect rights and liabilities under the old law.
This table provides a comprehensive overview of the structural and content-related changes proposed in the Income Tax Bill, 2025, in comparison to the existing Income Tax Act, 1961. The primary focus of the new bill is on simplification, clarity, and ease of compliance for taxpayers.
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Income Tax Bill 2025 : Govt released Section-wise comparison table and FAQs on 13.02.2025