Daijiworld Media Network
New Delhi, Feb 12: The government is set to introduce the much-anticipated Income Tax Bill, 2025, in the Lok Sabha on February 13. The new legislation, which aims to simplify and streamline the country’s tax structure, will replace the six-decade-old Income Tax Act, 1961.
The Income Tax Bill, 2025, will feature 536 sections across 23 chapters, spanning 622 pages—a significantly concise format compared to the bulky amendments-laden current law. While the 1961 Act originally had 880 pages, its current version has expanded over the years with amendments, making it complex and voluminous.
One of the most notable changes in the proposed law is the replacement of the term ‘previous year’ with ‘tax year’, eliminating the concept of an assessment year. Under the current system, income earned in the previous year (e.g., 2023-24) is taxed in the assessment year (2024-25). The new bill simplifies this by introducing a single tax year framework.
The number of schedules has been increased from 14 to 16, while the number of chapters remains at 23. This restructuring aims to improve clarity and efficiency in tax administration.
Tax experts believe that the increase in the number of sections signals a structured approach to tax governance, incorporating digital compliance mechanisms and reducing tax disputes.
Rajat Mohan, Senior Partner at AMRG & Associates, highlighted that the bill also provides clearer taxation guidelines on employee stock options (ESOPs), drawing from judicial rulings over the past 60 years.
A major shift in the new bill is the enhanced authority granted to the Central Board of Direct Taxes (CBDT). Previously, the Income Tax Department had to seek parliamentary approval for various procedural changes. However, under Clause 533, the CBDT can now introduce tax schemes, compliance frameworks, and digital tax administration measures independently, reducing bureaucratic delays.
Following its introduction in Parliament, the Income Tax Bill, 2025, is expected to be referred to a Parliamentary standing committee for scrutiny before being enacted into law.
Finance Minister Nirmala Sitharaman, in the Budget 2025-26, had reaffirmed the government's commitment to simplifying tax laws, emphasizing that the bill would be tabled during the current session. The comprehensive review of the Income Tax Act, 1961, was first announced during the July 2024 Budget, leading to the formation of a CBDT-led internal committee and 22 specialized sub-committees to refine the new framework.
The government aims for a clearer, dispute-free, and taxpayer-friendly system, ensuring greater certainty and ease of compliance.