2 min
05 April 2025
The Indian tax landscape is set for a major overhaul. Finance Minister Nirmala Sitharaman has introduced the new Income Tax Bill 2025 in the Lok Sabha on February 13, 2025. This bill aims to replace the Income Tax Act of 1961, which has been in effect for over 60 years. The new Income Tax Bill 2025 brings simplicity and clarity to India's tax framework. It reduces complexity by eliminating outdated provisions and refining tax laws. This article will explore the key features and changes in the new Income Tax Bill 2025 and how it might affect taxpayers across India.
What is the New Income Tax Bill 2025?
The new Income Tax Bill 2025 is a complete update of India's tax laws. It will replace the old Income Tax Act of 1961 after 64 years. The bill has 536 clauses spread across 622 pages. This is much smaller than the 823-page law it replaces. The new Income Tax Bill 2025 removes outdated rules and makes tax laws easier to understand. It uses simple language and clear structure. The bill also introduces a new concept called "tax year" instead of "assessment year" and "previous year." This makes it easier for taxpayers to track their tax periods.
Latest News: Finance Minister Nirmala Sitharaman presented the New Income Tax Bill 2025 in Lok Sabha
On February 13, 2025, Finance Minister Nirmala Sitharaman introduced the new Income Tax Bill in the Lok Sabha. She has urged the Speaker to refer it to a select committee of the House. The committee will submit its report by the first day of the next session. The bill consists of 536 clauses across 622 pages. It aims to replace the existing 823-page law that has been in effect for 64 years.
The Finance Minister first mentioned this bill during her Budget Speech in July 2024. She then confirmed it in her budget speech on February 1, 2025. The bill was presented as the 27th item on the Lok Sabha agenda that day. This marks a major step in reforming India's tax system to make it more user-friendly.
Purpose of the New Income Tax Bill
The main purpose of the new Income Tax Bill 2025 is to simplify India's tax laws. The current law has become very complex after 65 amendments and over 4000 changes. The bill aims to make tax laws clearer and easier to read. It removes outdated rules and makes the language simpler. The bill also brings all related tax rules together in one place. This makes it easier for taxpayers to find what they need.
The finance minister stated that the new bill will be "concise, lucid, easy to read and understand." It aims to reduce tax disputes and make compliance easier for taxpayers. The bill will take effect from April 1, 2026, giving people time to adjust to the new system.
New Income Tax Bill 2025: Key highlights
The new Income Tax Bill 2025 brings several important changes to India's tax system. Here are the key highlights:
New Income Tax Bill 2025: What has changed?
1. Chapters, sections and words
The new Income Tax Bill 2025 has fewer chapters and sections than the old law. The old Income Tax Act had 47 chapters, while the new bill has only 23. The number of sections has been reduced from 819 to 536. Even more impressive, the word count has dropped from 5.12 lakh words to 2.60 lakh words. About 1200 provisos and 900 explanations have been removed. This makes the law much shorter and easier to read.
2. Income tax Act, 1961 consists of 819 sections
The old Income Tax Act grew to 819 sections over time. Though it had only 298 numbered sections, many new sections were added with alpha-numeric codes. For example, sections like 115AC, 115AD, and 115JB were added to cover new tax policies. This made the law very confusing. The complex numbering system made it hard for taxpayers to find relevant rules.
3. New Income Tax Bill 2025's chapters, sections
The new Income Tax Bill keeps essential tax provisions while removing redundant ones. Its 536 sections cover all aspects of tax administration including:
4. Tax year
The new Income Tax Bill introduces the concept of "tax year" to replace "previous year" and "assessment year." This single term makes it easier to understand tax periods. The tax year refers to the financial year for which income is taxed. The bill also uses "financial year" for compliance timelines and procedures. This approach follows international standards, as many countries use the term "tax year."
5. Salaried employees
The new bill makes tax filing easier for salaried employees. All salary-related provisions are now in one place. Deductions like gratuity, leave encashment, and pension commutation are included in the salary chapter. Allowances like HRA are listed in Schedule II of the bill. The bill uses tables and formulas to improve readability. While all perks remain taxable, their valuation rules have been moved to separate Rules.
6. Virtual digital assets
The new Income Tax Bill classifies virtual digital assets (VDAs) as "assets" for tax purposes. This puts cryptocurrencies, NFTs, and other digital assets in the same category as property, jewellery, and shares. The bill incorporates amendments proposed in the Finance Bill 2025 regarding VDAs. This classification means digital assets will be subject to capital gains tax similar to other assets.
7. Specific incomes and persons
The new bill uses schedules to organize exemptions for specific incomes and persons:
8. Changes in tax rates
The new Income Tax Bill maintains the tax rates and slabs announced in the Union Budget 2025. Under the new tax regime, no income tax is payable on income up to Rs. 1.2 million (excluding special rate income). For salaried taxpayers, this limit increases to Rs. 1.275 million due to the Rs. 75,000 standard deduction. The new tax regime remains the default system, but taxpayers can still choose the old regime if they prefer.
9. TDS and TCS
The new bill presents TDS and TCS provisions in easy-to-read tables. There are separate tables for payments to residents, non-residents, and where no deduction is required. TCS applies to specific transactions such as:
Benefits of the New Income Bill
The new Income Tax Bill 2025 offers many benefits for taxpayers:
Impact of the New Bill
For individuals
Simpler tax filing process due to clearer provisions
Easier understanding of tax obligations with consolidated rules
Better access to exemptions through organized schedules
Reduced need for tax consultants for basic compliance
More transparency in tax calculations with tables and formulas
For businesses
Streamlined compliance procedures save time and resources
Clearer rules reduce uncertainty in tax planning
Updated provisions for digital assets improve modern business operations
Consolidated provisions make it easier to find relevant rules
Reduced risk of unintentional non-compliance due to clearer language
For tax authorities
More efficient tax administration with streamlined provisions
Reduced litigation due to clearer language and rules
Better compliance from taxpayers who understand their obligations
Easier training of new tax officials with simplified laws
More effective enforcement with updated digital provisions
No new changes to tax slabs, rates, return filing
The new Income Tax Bill maintains the tax slabs and rates announced in the Union Budget 2025. The income tax slabs under the new tax regime are:
Under the new tax regime, no income tax is payable on income up to Rs. 12 lakh (excluding special rate income). For salaried taxpayers, this limit increases to Rs. 12,75,000 due to the Rs. 75,000 standard deduction.
The tax return filing deadlines remain unchanged, but taxpayers will have four years instead of two to correct omissions and errors. The five categories of taxable income also remain unchanged:
The new Income Tax Bill simplifies TDS and TCS provisions through tables. TDS applies to various income sources, including:
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The new Income Tax Bill 2025 represents a major step forward in simplifying India's tax system. By reducing complexity and improving clarity, it will make tax compliance easier for individuals and businesses alike. The bill is expected to take effect from April 1, 2026, giving taxpayers time to understand the new provisions.
As you plan your financial future under this simplified tax regime, consider how a Bajaj Housing Finance Home Loan can help you achieve your housing dreams. With competitive home loan interest rates starting from7.99%* p.a., flexible repayment options, and quick processing, Bajaj Finserv makes home ownership accessible and affordable. Their top-up loan facility also allows existing customers to address additional financial needs without excessive paperwork.
Ready to own your dream home? Check your eligibility for a Bajaj Housing Finance Home Loan now by entering your mobile number and OTP. You may be just a few steps away from moving into your new home with a loan that suits your budget and needs perfectly.
What is the New Income Tax Bill 2025?
The new Income Tax Bill 2025 is a complete update of India's tax laws. It will replace the old Income Tax Act of 1961 after 64 years. The bill has 536 clauses spread across 622 pages. This is much smaller than the 823-page law it replaces. The new Income Tax Bill 2025 removes outdated rules and makes tax laws easier to understand. It uses simple language and clear structure. The bill also introduces a new concept called "tax year" instead of "assessment year" and "previous year." This makes it easier for taxpayers to track their tax periods.
Latest News: Finance Minister Nirmala Sitharaman presented the New Income Tax Bill 2025 in Lok Sabha
On February 13, 2025, Finance Minister Nirmala Sitharaman introduced the new Income Tax Bill in the Lok Sabha. She has urged the Speaker to refer it to a select committee of the House. The committee will submit its report by the first day of the next session. The bill consists of 536 clauses across 622 pages. It aims to replace the existing 823-page law that has been in effect for 64 years.
The Finance Minister first mentioned this bill during her Budget Speech in July 2024. She then confirmed it in her budget speech on February 1, 2025. The bill was presented as the 27th item on the Lok Sabha agenda that day. This marks a major step in reforming India's tax system to make it more user-friendly.
Purpose of the New Income Tax Bill
The main purpose of the new Income Tax Bill 2025 is to simplify India's tax laws. The current law has become very complex after 65 amendments and over 4000 changes. The bill aims to make tax laws clearer and easier to read. It removes outdated rules and makes the language simpler. The bill also brings all related tax rules together in one place. This makes it easier for taxpayers to find what they need.
The finance minister stated that the new bill will be "concise, lucid, easy to read and understand." It aims to reduce tax disputes and make compliance easier for taxpayers. The bill will take effect from April 1, 2026, giving people time to adjust to the new system.
New Income Tax Bill 2025: Key highlights
The new Income Tax Bill 2025 brings several important changes to India's tax system. Here are the key highlights:
- Simplified language: The bill uses clear wording and removes complex legal terms. This makes the tax laws easier for regular people to understand.
- Reduced size: The bill has only 622 pages compared to 823 pages in the old law. Fewer pages mean less confusion for taxpayers.
- Tax year concept: The bill introduces "tax year" to replace "previous year" and "assessment year." This single term makes tax periods clearer for everyone.
- Consolidated rules: Related tax provisions are now grouped together. Taxpayers no longer need to search through different sections.
- Tables and formulas: The bill uses 57 tables compared to 18 in the old law. Visual formats make complex calculations easier to follow.
- Digital provisions: The bill includes rules for virtual digital assets like cryptocurrency. This brings tax laws up to date with modern financial tools.
New Income Tax Bill 2025: What has changed?
1. Chapters, sections and words
The new Income Tax Bill 2025 has fewer chapters and sections than the old law. The old Income Tax Act had 47 chapters, while the new bill has only 23. The number of sections has been reduced from 819 to 536. Even more impressive, the word count has dropped from 5.12 lakh words to 2.60 lakh words. About 1200 provisos and 900 explanations have been removed. This makes the law much shorter and easier to read.
2. Income tax Act, 1961 consists of 819 sections
The old Income Tax Act grew to 819 sections over time. Though it had only 298 numbered sections, many new sections were added with alpha-numeric codes. For example, sections like 115AC, 115AD, and 115JB were added to cover new tax policies. This made the law very confusing. The complex numbering system made it hard for taxpayers to find relevant rules.
3. New Income Tax Bill 2025's chapters, sections
The new Income Tax Bill keeps essential tax provisions while removing redundant ones. Its 536 sections cover all aspects of tax administration including:
- Administrative frameworks and roles for tax officers and taxpayers
- Income determination and appellate procedures
- Impact of tax interpretations on economic policy
4. Tax year
The new Income Tax Bill introduces the concept of "tax year" to replace "previous year" and "assessment year." This single term makes it easier to understand tax periods. The tax year refers to the financial year for which income is taxed. The bill also uses "financial year" for compliance timelines and procedures. This approach follows international standards, as many countries use the term "tax year."
5. Salaried employees
The new bill makes tax filing easier for salaried employees. All salary-related provisions are now in one place. Deductions like gratuity, leave encashment, and pension commutation are included in the salary chapter. Allowances like HRA are listed in Schedule II of the bill. The bill uses tables and formulas to improve readability. While all perks remain taxable, their valuation rules have been moved to separate Rules.
6. Virtual digital assets
The new Income Tax Bill classifies virtual digital assets (VDAs) as "assets" for tax purposes. This puts cryptocurrencies, NFTs, and other digital assets in the same category as property, jewellery, and shares. The bill incorporates amendments proposed in the Finance Bill 2025 regarding VDAs. This classification means digital assets will be subject to capital gains tax similar to other assets.
7. Specific incomes and persons
The new bill uses schedules to organize exemptions for specific incomes and persons:
- Schedule II (16 rows): Exempt incomes like agricultural income
- Schedule III (39 rows): Persons eligible for exemption on certain income
- Schedule IV (14 rows): Exemptions for non-residents
- Schedule V (8 rows): Exemptions for Business trusts and Sovereign Wealth Funds
- Schedule VI (12 rows): Exemptions for IFSC units
- Schedule VII (48 rows): Persons exempt from tax
8. Changes in tax rates
The new Income Tax Bill maintains the tax rates and slabs announced in the Union Budget 2025. Under the new tax regime, no income tax is payable on income up to Rs. 1.2 million (excluding special rate income). For salaried taxpayers, this limit increases to Rs. 1.275 million due to the Rs. 75,000 standard deduction. The new tax regime remains the default system, but taxpayers can still choose the old regime if they prefer.
9. TDS and TCS
The new bill presents TDS and TCS provisions in easy-to-read tables. There are separate tables for payments to residents, non-residents, and where no deduction is required. TCS applies to specific transactions such as:
- Sale of alcohol, tendu leaves, minerals, and scrap materials (1-5%)
- Sale of motor vehicles above Rs. 1 million (1%)
- Foreign remittances exceeding Rs. 700,000 (5%)
Benefits of the New Income Bill
The new Income Tax Bill 2025 offers many benefits for taxpayers:
- Simplified tax laws: The bill reduces complexity by using clear language and fewer sections. This makes it easier for regular people to understand their tax obligations.
- Better organisation: Related provisions are grouped together for easier reference. Taxpayers can find what they need without searching through multiple sections.
- Visual presentation: Tables and formulas make complex calculations easier to understand. This reduces errors in tax filing and compliance.
- Updated for digital economy: The bill includes provisions for virtual digital assets. This brings tax laws in line with modern financial trends.
- Reduced litigation: Clearer language and provisions should result in fewer tax disputes. This saves time and money for both taxpayers and the government.
- International alignment: The "tax year" concept aligns with global practices. This makes India's tax system more compatible with international standards.
Impact of the New Bill
For individuals
Simpler tax filing process due to clearer provisions
Easier understanding of tax obligations with consolidated rules
Better access to exemptions through organized schedules
Reduced need for tax consultants for basic compliance
More transparency in tax calculations with tables and formulas
For businesses
Streamlined compliance procedures save time and resources
Clearer rules reduce uncertainty in tax planning
Updated provisions for digital assets improve modern business operations
Consolidated provisions make it easier to find relevant rules
Reduced risk of unintentional non-compliance due to clearer language
For tax authorities
More efficient tax administration with streamlined provisions
Reduced litigation due to clearer language and rules
Better compliance from taxpayers who understand their obligations
Easier training of new tax officials with simplified laws
More effective enforcement with updated digital provisions
No new changes to tax slabs, rates, return filing
The new Income Tax Bill maintains the tax slabs and rates announced in the Union Budget 2025. The income tax slabs under the new tax regime are:
| Income Range (Rs.) | Tax Rate |
| Up to 4,00,000 | No tax |
| 4,00,001 to 8,00,000 | 5% |
| 8,00,001 to 12,00,000 | 10% |
| 12,00,001 to 16,00,000 | 15% |
| 16,00,001 to 20,00,000 | 20% |
| 20,00,001 to 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Under the new tax regime, no income tax is payable on income up to Rs. 12 lakh (excluding special rate income). For salaried taxpayers, this limit increases to Rs. 12,75,000 due to the Rs. 75,000 standard deduction.
The tax return filing deadlines remain unchanged, but taxpayers will have four years instead of two to correct omissions and errors. The five categories of taxable income also remain unchanged:
- Salaries
- Income from house property
- Profits and gains from business or profession
- Capital gains
- Income from other sources
The new Income Tax Bill simplifies TDS and TCS provisions through tables. TDS applies to various income sources, including:
- Salaries
- Professional fees
- Interest income
- Rent payments
- Sale of alcohol and forest produce (1-5%)
- Sale of motor vehicles above Rs. 1 million (1%)
- Foreign remittances exceeding Rs. 700,000 (5%)
Just like the new tax bill simplifies financial planning, Bajaj Housing Finance Home Loan simplifies home buying. Check your loan offers today by entering your mobile number and OTP.
How to apply for Bajaj Finserv Home Loan
Getting a home loan from Bajaj Finserv is easy:
- Click on the 'APPLY' button on the home loan page.
- Enter your full name, mobile number, and employment type before selecting the type of loan you wish to apply for.
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- Next, enter your date of birth, PAN number and other details as requested depending on your selected occupation type.
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- Employment: Salaried or self-employed professionals
- Income: Stable monthly income with good repayment capacity
- Credit score: 750+ preferred for best interest rates
- Property: The property should be legally approved with clear titles
- Documents required for home loan include identity proof, address proof, income proof, and property documents
The new Income Tax Bill 2025 represents a major step forward in simplifying India's tax system. By reducing complexity and improving clarity, it will make tax compliance easier for individuals and businesses alike. The bill is expected to take effect from April 1, 2026, giving taxpayers time to understand the new provisions.
As you plan your financial future under this simplified tax regime, consider how a Bajaj Housing Finance Home Loan can help you achieve your housing dreams. With competitive home loan interest rates starting from7.99%* p.a., flexible repayment options, and quick processing, Bajaj Finserv makes home ownership accessible and affordable. Their top-up loan facility also allows existing customers to address additional financial needs without excessive paperwork.
Ready to own your dream home? Check your eligibility for a Bajaj Housing Finance Home Loan now by entering your mobile number and OTP. You may be just a few steps away from moving into your new home with a loan that suits your budget and needs perfectly.
