Introduction to the New Income Tax Bill 2025

Following the re-election of the Indian Government for a third term, the Finance Minister announced a comprehensive review of the Income Tax Act. The focus is on simplification, reducing litigation and compliance, and eliminating redundant provisions. The new IT Bill, 2025, aims to replace the decades-old existing law, promising a significant overhaul of the current tax system.

Effective Date and Structure

The Bill is set to take effect on April 1, 2026, allowing ample time for stakeholder consultations. It has been streamlined to approximately 55% of the existing law's word count by removing obsolete sections and improving readability through the use of clauses and tables.

Tax Year Concept and Taxpayer's Charter

One of the notable changes is the removal of the "assessment year" concept, now referred to as "tax year" to align with international standards. Additionally, the Bill introduces a Taxpayer's Charter to ensure transparency and fairness in tax administration.

Simplified TDS /TCS Sections and Policy Changes

The Bill simplifies TDS/TCS related provisions by merging them into a single section and providing simplified tables for rates and thresholds. While there are no new taxes introduced, the Bill includes beneficial changes from recent budgets, such as streamlined TDS/TCS provisions and reduced income tax slab rates under the new regime.

Conclusion

The government's efforts to simplify the tax system and improve the ease of doing business are commendable. Although no substantial amendments have been proposed, the overall simplification should benefit taxpayers by easing compliance and providing certainty. However, the success of these changes will largely depend on the administration and the detailed rules that will be required for the smooth operation of the new law.