5 Major Highlights of the Newly Introduced Income Tax Bill 2025
Finance Minister Nirmala Sitharaman introduced the New Income Tax Bill 2025 on February 13, 2025, in Lok Sabha, replacing the current Income Tax Act, 1961, to simplify the laws. It is the set of rules and regulations upon which the Income Tax Department levies, administers, collects and recovers taxes. The new income tax bill is going to be in effect from 1st April 2026, i.e. FY 2026-27.
Let’s take a look at the highlighted features of the New Income Tax Bill 2025.
Highlights of New Income Tax Bill 2025
‘Tax Year’ Introduced
The new bill has introduced the new concept of ‘tax year’ which replaces the terms ‘previous year’ and ‘assessment year’ used in the Income Tax Act of 1961. This change has been made to avoid confusion for taxpayers. A tax year is a period consisting of 12 months in a financial year
Simplified and Clear Language
The new Income Tax Bill is more user-friendly, which brings all the rules and explanations to one place in the Income Tax Act. It aims to provide simpler tax language that is easily understandable by the taxpayer.
Number of Chapters and Sections Reduced
The new bill has reduced the number of chapters and sections in the current Income Tax Act, chapters reduced from 47 to 23, 819 effective sections reduced to 536 sections and 5.12 lakh words to 2.60 lakh words. Additionally, in the new tax bill, 1200 provisos and 900 explanations have been removed.
Obsolete Provisions Removed
The new income tax bill has removed more than 300 obsolete and redundant laws. For ex. Section 80CCA (provide deduction for investment on National Saving Scheme), Section 80CCF (provide deduction for investment in long-term infrastructure bond), etc.
No Changes in Tax Laws
The new income tax bill does not make any major changes to income tax laws. The income rates, income tax slabs, income tax return filing deadlines and other tax laws remain unchanged.
