New Income Tax Bill 2025: Tax Act Changes and it Affects?
The New Income Tax Bill 2025 has been approved by the union cabinet on Friday. This bill makes tax rules simple, reduces legal issues and brings clarity. The new law will be replacing the older Income Tax Act of 1961 and would be presented to the parliament in the Budget session 2025, probably on Monday.
The bill is expected to streamline tax provisions, reduce litigation, and promote a trust-based tax system for taxpayers.
Why a New Income Tax Bill has been introduced?
The Income Tax Act, 1961, has undergone many amendments and is, therefore, lengthy and not easy to comprehend.
The new income tax bill goal is to correct old provisions of income tax by; using clear and simple language in formulating tax provisions; reducing ambiguity so that legal disputes are held at bay; making compliance easier for both individuals and businesses.
Introduce a trust-based tax system where scrutiny is done only in cases of non-compliance.
Key Features of New Income Tax Bill
1. Simplified Tax Structure
The new bill is going to shorten existing tax laws, which will make them more direct and easy to understand. Simplification aims to avoid misinterpretation and will make the filing of taxes easy. .
2. Tax Relief Without Budget Dependency
A striking feature of the bill is that it might eliminate waiting for the annual budget for income tax reliefs or modification in the tax provisions. Reports indicate that some of the provisions will make it possible for the government to use executive orders to vary the limits of deductions and rebate amounts to ensure that taxation does not become static but full of change and fluidity.
3. Paperless and Digital Taxation
The bill will focus on digital tax filing and paperless assessment systems. It would mean the human touch is going to be very minimal in the processing of tax procedures. This initiative goes with the government’s faceless assessment, aiming at reducing corruption and increasing transparency.
4. Stronger Rights of Taxpayers
This system will be of trust-based and taxpayers will not be harassed without proof that they are in a non-compliant position. So, this amendment is to lessen harassment and court cases so the certainty of the taxpayers will improve.
Impact of the New Income Tax Bill
- Salaried Individuals: The lowered tax system will ease the process of filling of taxes and the tax liability could be reduced on the middle-class taxpayers.
- Businesses: A more readable tax code and fewer statutory obstacles mean that compliance for businesses will be easier to handle.
The new tax law is known as the Direct Tax Code, and it will be implemented to alter the system of income tax in the country. It will replace the old Income Tax Act of 1961 with a more simplified and clear set of rules. The purpose would be to make taxation laws clear and comprehensible for the taxpayer or tax authority.
In Budget Speech 2025, it was stated that the new bill is aligned with the principle of “Nyaya” or justice, much like the approach adopted in the Bharatiya Nyaya Sanhita, which replaced the Indian Penal Code of 1860 in July 2024. The bill would be drafted in a way to be a clear, concise tax law easy to understand. It would also cut down litigation and enhance tax certainty for individuals and businesses.
The New Income Tax Bill 2025 is going to be a giant leap for the government in the direction of making taxation more efficient and transparent. The provisions of the bill are aimed at promoting compliance, reducing disputes, and providing a fairer tax structure for all taxpayers.
