Key FAQs on the Income Tax Bill 2025
The Income Tax Bill 2025, introduced in the Lok Sabha on February 13, 2025, aims to simplify and modernize India’s tax legislation. Here are some frequently asked questions (FAQs) regarding this new bill:
- What is the main objective of the Income Tax Bill 2025?
The primary goal of the Income Tax Bill 2025 is to streamline the existing Income Tax Act of 1961, making it more succinct, user-friendly, and easier to understand. This includes removing redundant provisions and introducing clearer language throughout the bill.
- What changes have been made to the structure of the bill?
The new bill reduces the number of chapters from 47 to 23 and the number of sections from 819 to 536. The overall word count has been halved from approximately 5.12 lakh words to around 2.60 lakh words, significantly simplifying the text.
- What is the significance of the ‘tax year’ concept?
The Income Tax Bill introduces a ‘tax year’ defined as a 12-month period beginning April 1. This replaces the previous concepts of ‘previous year’ and ‘assessment year,’ which often caused confusion among taxpayers.5 The new framework aims for tax calculations to occur within the same year that income is earned.
- Will there be changes in tax rates or slabs?
No major changes have been made to income tax rates or slabs under the new bill. The existing structure remains intact, ensuring continuity and stability for taxpayers.
- What obsolete provisions have been removed?
The bill proposes to eliminate over 300 outdated provisions, including various deductions that are no longer relevant, such as those related to long-term infrastructure bonds and national savings schemes.
- How does this bill affect digital assets?
The new legislation includes virtual digital assets (VDAs), such as cryptocurrencies and NFTs, as taxable capital assets, aligning them with existing asset categories like land and shares.
- When will this new bill come into effect?
If passed by Parliament, the Income Tax Bill 2025 is expected to take effect from April 1, 2026.
- How will compliance be improved under this new bill?
The bill aims to reduce litigation and disputes by providing clearer guidelines and consolidating relevant provisions into easy-to-read tables, enhancing clarity regarding deductions and tax obligations.
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