Indian Government has taken a major leap into tax reform with the introduction of a new Income Tax Bill in the Lok Sabha on February 13, 2025. The new bill seeks to modernize the system of taxation and repeal the old Income Tax Act of 1961. The bill was presented by Finance Minister Nirmala Sitharaman, who described its provisions as simplifying taxation and enhancing transparency in financial transactions.
Key Highlights of the New Income Tax Bill
- Concise Structure: The new bill has been condensed from 823 to 622 pages, ensuring a more to-the-point and efficient tax framework.
- Increased Sections and Schedules:
- Sections expanded from 298 to 536 to incorporate detailed provisions.
- Schedules increased from 14 to 16 for better clarity and coverage.
- Replacement of ‘Assessment Year’ with ‘Tax Year’ to align with global tax terminology.
- Introduction of Taxpayer Charter to safeguard taxpayer rights and promote transparency in tax administration.
- Standardized Deductions for Salary Components such as gratuity and leave encashment, making compliance easier for individuals.
Cryptocurrency and Unaccounted Income Regulations
- The bill encompasses crypto assets under the head of non-disclosed income, thus bringing these into the legal ambit of taxation.
- This puts digital transactions on par with any other taxable asset- cash, bullion, or jewellery- and comes under the regulatory ambit.
Also Read: Budget 2025: Calculate your savings under New Tax Regime?
Expected Implementation Timeline
- The Income Tax Act of 2025 is supposed to be enforced by April 2026 to phase in the regulation to allow the taxpayers and the business world enough time to adjust and make the required changes.
Impact on Taxpayers and Businesses
- Taxation Simplification: A provision is being brought to light exempting removal from complex provisions making tax compliance an easier task for individual and business entities.
- Increased Transparency: The inclusion of a taxpayer charter builds up a fairer and thus more accountable tax system.
- Digital Transactions Under Scrutiny: Cryptocurrency investors must disclose their holdings, reducing the scope for tax evasion.
Comparative Overview of Old vs. New Tax Bill
| Feature | Old Tax Act (1961) | New Tax Bill (2025) |
|---|---|---|
| Number of Pages | 823 | 622 |
| Number of Sections | 298 | 536 |
| Number of Schedules | 14 | 16 |
| Assessment Year | Yes | No (Replaced with Tax Year) |
| Cryptocurrency Taxation | Not specified | Considered as undisclosed income |
| Taxpayer Charter | No | Yes |
Final Thoughts
This development of this New Income Tax Bill marks a radical change in the country’s finance and taxation picture, as it simplifies the complexities of tax, introduces the use of digital assets, and focuses on the rights of the taxpayer. As the bill progresses through parliamentary discussions, taxpayers and businesses should stay informed about upcoming changes and prepare for compliance.
Also Read: Cheaper EVs & Boost for Battery Manufacturing: Union Budget 2025-26
