Finance Minister introduced new Income Tax Bill in Parliament, 10 major changes will be held

Finance Minister Nirmala Sitharaman has introduced the new Income Tax Bill 2025 in the Lok Sabha. Earlier on 7 February 2025, the Bill was approved by the Union Cabinet. This new bill will replace the Income Tax Act of about 60 years old and will make the tax system simple, transparent and more effective.

 

Proposed amendment in new income tax bill

1. Use of ‘Tax Year’: In the new bill, the word ‘Tax Year’ will be used in place of ‘evaluation year’, which will be a 12 -month period from April 1 to March 31.
2. Tax year for new business: If a new business or operation is started, its tax year will start from the same day and end at the end of the same financial year.
3. Better Legal Language: In the new bill, legal words have been made simple and shorter, which has made it easy to understand.
4. The number of legal documents has been reduced: the new income tax bill is 622 pages compared to the old 823 pages.
5. Increase in chapters and streams: The number of chapters in the bill will remain 23, but the number of sections will increase from 298 to 536.
6. Increase in schedules: The number of schedules increased from 14 to 16.
7. Removing complex provisions: The complex explanations and provisions present in the old law have been removed, making it easy to understand.
8. Strict rules on virtual digital assets: Virtual digital assets like cryptocurrency will now be considered under undisclosed income.
9. Measures to prevent tax evasion: Strict provisions have been implemented on digital transactions and crypto assets to increase transparency and prevent tax evasion.
10. Taxpayer Charter: The new bill also includes taxpayer charter, which will protect the rights of taxpayers and make the tax administration transparent.

Why was the new Income Tax Bill introduced?

The current Income Tax law has become technically complex and practically cumbersome due to being a decade old. It was changed over time, but it was not perfectly suitable for today’s digital and modern economy. Therefore, the government has introduced a new Income Tax Bill 2025 to simplify the tax system, provide relief to taxpayers and make the compliance process easier.

Change made in slab

Finance Minister Nirmala Sitharaman announced a new tax slab in Budget 2025, which is as follows-

No tax up to 0-4 lakhs

4 -8 lakh 5%

8-12 lakh 10%

12-16 lakh 15%

16-20 lakh 20%

20-24 lakh 25%

30% at more than Rs 24 lakh

Earlier the no-tax limit was Rs 7 lakh, which has been increased to Rs 12 lakh. This change will give great relief to the middle class, as their taxable income will be reduced compared to before.

The old law had many problems.

• The current Income Tax Act came into force in 1961. There have been many major changes in the Indian economy over the years, but the tax system is still based on the old structure. Due to which taxpayers were facing a lot of difficulties.
• I was having difficulty in understanding the rules by complex.
• Administrative difficulties in filing and complying with tax returns had increased.
• The solution of tax disputes was very slow and complex.
• There were no adequate provisions to properly adjust the digital economy.

What will be the benefit of the common man from the new tax law?

The middle class will get relief as income up to Rs 12 lakh will be tax-free. Apart from this, tax filing will be easier, paperwork will be reduced and online tax return filing will be promoted. With the new solution system, the disputes will be resolved soon. This bill will promote digital payments and business.