New Income Tax Bill 2025 Highlights: Key Changes & Updates

The Indian government has introduced the Income Tax Bill , aiming to modernize the tax system, simplify compliance, and enhance transparency. This reform aligns India’s taxation with global standards, reducing legal complexities and making tax calculations more efficient. The new income tax bill 2025 highlights several key structural changes that will impact taxpayers and businesses alike.

Introduction to the Income Tax Bill 2025

The government has released the Income Tax Act 2025 PDF, allowing taxpayers and professionals to review its provisions. Initially speculated to be called the Direct Tax Code, it is officially termed the Income Tax Bill . This new legislation aims to streamline tax laws, ensuring clarity and ease of implementation.

Implementation Date of the New Income Tax Bill 2025

Understanding when the Income Tax Bill  will come into effect is crucial for financial planning. The new tax law will be enforced from April 1, 2026, making the financial year 2026-27 the first taxable year under this new system.

Exam Guidelines for CA, CS & CMA Students

• Exams before March 31, 2026, will follow the Income Tax Act 1961.

• Exams after April 1, 2027, will be based on the Income Tax Bill 2025.

Objectives of the Income Tax Bill 2025

The government introduced the new income tax bill 2025 highlights with three main objectives:

• Align tax laws with international standards

• Reduce complexities and simplify compliance

• Enhance transparency and efficiency in tax calculations

To achieve these goals, the Income Tax Bill  incorporates several significant reforms.

Key Changes in the New Income Tax Bill 2025 Highlights

1. Reduction in Sections

The Income Tax Bill  reduces the total number of sections from 298 to 536, removing redundant provisions and simplifying tax laws.

2. Restructuring of Chapters

The bill consolidates 47 chapters into 23, ensuring better clarity and ease of reference for taxpayers.

3. Simplified Language & Structure

It features a clear, structured approach using tables, formulas, and simplified legal terms, reducing ambiguities.

4. Reduced Word & Page Count

• Old Act: 5.12 lakh words, 822 pages

• New Act: 2.6 lakh words, 622 pages

5. Measures to Reduce Litigation

The Income Tax Bill  incorporates past judicial rulings to minimize disputes and enhance compliance.

6. Replacement of ‘Previous Year’ & ‘Assessment Year’

A single ‘Tax Year’ (April 1 – March 31) replaces the older complex terminology, making tax calculations more straightforward.

7. Old & New Tax Regimes Retained

Taxpayers can continue choosing between the old and new tax regimes, providing flexibility in tax planning.

8. Virtual Digital Assets (VDA) Taxation

The bill formally recognizes cryptocurrencies, NFTs, and other digital assets as taxable entities, ensuring compliance with digital income taxation.

9. No Changes in Tax Slabs

The new income tax bill 2025 highlights confirm that tax slabs remain unchanged, with an effective NIL tax for incomes up to INR 12 lakh due to rebates.

10. Retention of Five Income Heads

The five traditional income classifications remain unchanged:

• Salary

• House Property

• Business/Profession

• Capital Gains

• Other Sources

11. New Section Numbering System

The Income Tax Bill  introduces a revamped section numbering system:

• Salary Income: Sections 15-19 (previously 15-17)

• House Property: Sections 20-25 (previously 20-27)

• Business/Profession: Sections 26-66 (previously 28-44)

• Capital Gains: Sections 67-91 (previously 45-55)

• Other Sources: Sections 92-95 (previously 56-59)

Conclusion

The new income tax bill 2025 highlights a significant transformation in India’s taxation system. By simplifying compliance, reducing litigation, and improving legal clarity, the Income Tax Bill  ensures a fairer, more transparent, and globally aligned tax structure. Staying updated with these changes will help individuals and businesses effectively plan their finances and meet compliance requirements with ease.