New Income Tax Bill 2025 Highlights – Major Changes & Impact
The new income tax bill 2025 highlights key structural reforms aimed at modernizing India’s taxation system. Introduced in Parliament on February 13, 2025, the income tax bill seeks to simplify compliance, enhance transparency, and reduce litigation. The bill is currently under review, and its provisions are expected to shape the future of tax laws in India.
Implementation Date of the Income Tax Bill 2025
A critical question among taxpayers is when the income tax bill will be effective. The new law will come into force from April 1, 2026, making it applicable for the financial year 2026-27. Taxpayers and businesses must prepare in advance to ensure compliance with the updated regulations.
Transition Timeline for CA, CS & CMA Students
For students preparing for taxation exams, the transition period is as follows:
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Until March 31, 2026 – Exams will be based on the Income Tax Act 1961.
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From April 1, 2027 – Exams will follow the new income tax bill 2025 highlights.
Objectives of the New Income Tax Bill 2025
The government aims to achieve the following objectives through the income tax bill:
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Modernization – Bringing tax laws in line with global standards.
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Simplification – Making tax provisions clearer and easier to interpret.
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Efficiency – Reducing disputes and ensuring smooth compliance.
Major New Income Tax Bill 2025 Highlights
1. Simplified Tax Law Structure
The income tax bill streamlines the tax code by reducing the number of sections from 298 to 536 and eliminating unnecessary provisions. This change will help taxpayers navigate the law more efficiently.
2. Organized Chapter Restructuring
To improve clarity, the number of chapters has been reduced from 47 to 23, ensuring better categorization of tax provisions.
3. Reduction in Word & Page Count
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Old Tax Law: 5.12 lakh words
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New Income Tax Bill 2025: 2.6 lakh words (almost 50% reduction)
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Total pages: 622 (200 pages shorter than before)
4. Introduction of a Unified Tax Year
The terms ‘Previous Year’ and ‘Assessment Year’ have been replaced with a single ‘Tax Year’ running from April 1 to March 31. The first tax year under the new income tax bill 2025 highlights will be 2026-27.
5. Retention of Old & New Tax Regimes
Taxpayers can still choose between the old and new tax regimes, allowing flexibility in taxation.
6. Taxation of Virtual Digital Assets (VDA)
Cryptocurrencies, NFTs, and other digital assets are now taxable. Undisclosed income from these assets will be closely monitored.
7. Simplified Language to Reduce Litigation
The income tax bill introduces clearer language, tables, and formulas, making it easier for taxpayers to understand tax provisions and reducing disputes.
8. No Changes in Tax Slabs
The new income tax bill 2025 highlights confirm that the existing tax slabs remain unchanged. Individuals earning INR 12 lakh will continue to enjoy a zero-tax liability after applicable rebates.
9. Continuation of Five Income Heads
The income tax bill retains the same five categories of income:
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Salary
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House Property
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Business/Profession
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Capital Gains
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Other Sources
10. Updated Section Numbers for Better Navigation
To enhance readability, section numbers have been modified:
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Salary Income: Sections 15-19 (previously 15-17)
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House Property: Sections 20-25 (previously 20-27)
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Business/Profession: Sections 26-66 (previously 28-44)
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Capital Gains: Sections 67-91 (previously 45-55)
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Other Sources: Sections 92-95 (previously 56-59)
Conclusion
The new income tax bill 2025 highlights a significant shift in India’s tax system. With simpler provisions, enhanced transparency, and reduced litigation, taxpayers can expect a smoother compliance process. Stay updated on all key reforms and provisions related to the income tax bill.
