An Overview of New Income Tax Bill, 2025

Summary: The New Income-Tax Bill, 2025, a 622-page document with 536 sections, 23 chapters, and 16 schedules, is set to replace the Income Tax Act of 1961, which spanned 880 pages. Introduced in parliament on February 13, 2025, the bill aims to simplify tax provisions for both taxpayers and administrators, fostering tax certainty and reducing litigation. While the bill restructures the act, it largely retains existing provisions, including the old and new tax regimes, capital gains calculations, and assessment procedures. The tax year is defined as the financial year commencing on April 1st, replacing the “previous year” concept. Changes include extending the audit report submission deadline to October 31st and the audit return filing deadline to November 30th. The bill presents sections in a tabular format for improved readability and omits certain redundant provisions. It renumbers sections numerically, removing alphanumeric designations. Key areas like exempted incomes, charitable institution income, deductions, and capital gains are addressed, with corresponding clause numbers provided. Despite the restructuring, the bill maintains the essence of the 1961 act, focusing on clarity and ease of understanding rather than substantial legal changes. It will be applicable from April 1, 2026.

The New Income-Tax Bill, 2025 is being introduced in parliament on Thursday February 13th, 2025 to replace more than six decades old income tax act, 1961. Taxation History in India has developed over the years. Briefly, following are the Income Tax Acts:-

1. Income Tax Act, 1860.
2. Income Tax Act, 1886.
3. Income Tax Act, 1922
4. Income Tax Act, 1961
5. And now the Income Tax Bill 2025.

The New Income Tax Bill 2025 will comprise 622 pages as compared with the original income tax act, 1961 with its 880 pages, when it was launched.

The Bill contains 536 sections, 23 chapters and 16 schedules.

The objective of the New Tax Law is to simplify the provisions which are easy to understand for taxpayers and tax administrators, leading to tax certainty and reduced litigation.

The arrangement of chapters and clauses/sections is as under:-

SALIENT FEATURES

• There are no substantive changes in the law rather it is continuation of the 1961 Act.
• The New Income Tax Law will be applicable w.e.f. 1/04/2026 i.e. for the period 01/04/2026 to 31/03/2027.
• Clause 3 of the Bill defines the tax year as under:-

For the purposes of this Act, “tax year” means the twelve months period of the financial year commencing on the 1st April.

This clause replaces old section 3 which defined Previous Year. There will be no reference to previous year and assessment year in the New Code.

• Income Tax Act 1961 contained numeric and alpha numeric sections, provisos and explanations whereas Income Tax Bill contains only numeric sections.
• There is continuation of old tax regime and new tax regime.
• There is no change in provisions relating to assessment and re assessment of income escaping assessment.
• There is continuation of provisions relating to short term capital gains and long term capital gains.
• Date for submission of Audit report have been extend to 31^st of October and Date of filing of Audit return have been extend to 30^th of November.
• New Income Tax bill contains various sections in tabular form which are easy to understand.
• Certain redundant provisions not incorporated.
• Following is the list of important sections under Income Tax Act, 1961 and clause no. of the Income Tax Bill, 2025.

Disclaimer: This write up has been prepared in a short span of time as the time available for going through the voluminous provisions was very short. Readers are requested to cross check the various provisions.