New Income Tax Bill 2025 Tabled in Parliament: Key Highlights You Must Know

New Delhi, February 13:

Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in the Lok Sabha on Tuesday, aiming to simplify India’s tax system by restructuring existing provisions and improving clarity. The proposed bill seeks to replace complex legal terminology, enhance taxpayer convenience, and streamline tax administration without introducing new taxes.

The 622-page bill consists of 536 sections, 23 chapters, and 16 schedules, reducing ambiguity and ensuring that tax laws are more accessible to the general public. This new legislation is set to replace the Income Tax Act of 1961, which currently has 298 sections and 14 schedules.

Key Highlights of the Income Tax Bill 2025

1. Simplified Language to Reduce Litigation
   The bill focuses on using clear and concise language to minimize tax disputes and legal ambiguities. Experts believe this change will benefit both taxpayers and tax authorities by reducing misinterpretations.

2. Restructuring Without Significant Tax Policy Changes
   Tax expert Balwant Jain remarked that the bill is primarily a restructuring of the existing tax laws, eliminating redundant provisions while maintaining core principles.

3. Reduction in Sections and Chapters for Easier Compliance

   • The new bill has 536 sections, compared to 298 in the existing act.
   • The number of chapters has been reduced from 52 to 23, consolidating related topics and removing outdated provisions.
   • While the total page count has decreased from 1,647 pages to 622 pages, complex provisions have been broken into simpler, smaller sections for better clarity.

4. Revised Income Tax Slabs

   • Income up to ₹12 lakh is exempt from taxation under the new structure.
   • A standard deduction of ₹75,000 is introduced, effectively making income up to ₹12.75 lakh tax-free for salaried individuals.

5. Longer Window for Filing Updated Returns

   • Taxpayers can now file updated income tax returns up to four years from the relevant assessment year, an increase from the current two-year limit.

6. Encouraging Consumer Spending & Savings

   • Revised tax slabs and increased exemptions are expected to provide relief to the middle class, potentially boosting consumer spending and savings.

7. Clear Taxation on Digital Assets

   • The bill introduces specific tax provisions for virtual digital assets, including cryptocurrency and NFTs, under Clauses 67 to 91.

8. Stronger Compliance for Non-Profit Organizations

   • The new framework under Clauses 332 to 355 clearly defines taxable income, compliance rules, and commercial activity restrictions for charitable organizations.

9. New Incentives for Startups & Renewable Energy

   • The bill introduces fresh provisions supporting startups, digital businesses, and investments in renewable energy.

10. Revised Capital Gains Tax Structure

• The definition and categorization of capital gains have been refined under Clauses 11 to 154, ensuring better clarity and fair taxation of securities and real estate transactions.

Union Budget 2025 & Tax Reforms

The Union Budget 2025, presented on February 1, 2025, emphasizes structural tax reforms, aiming to simplify tax laws, enhance compliance, and provide financial relief to taxpayers. The Income Tax Bill 2025 is a crucial step in modernizing India’s taxation system while maintaining stability in government revenue collection.

With the bill now tabled in Parliament, further discussions and potential amendments are expected before its final approval and implementation.