New Income Tax Bill Tabled by Finance Minister

                On February 13, 2025, Finance Minister 
Nirmala Sitharaman introduced the Income 
Tax Bill, 2025, in the Lok Sabha, marking a 
significant overhaul of India's tax legislation. 
This new 
bill aims to replace the six-decade-old Income 
Tax Act of 1961, intending to simplify tax laws, 
reduce litigation, and make compliance more 
straightforward for taxpayers.

Key Features of the Income Tax Bill, 2025

1. Simplified Language and Structure

The new bill comprises 536 sections spread 
across 23 chapters and includes 16 schedules, 
condensed into 622 pages. This is a 
substantial reduction from the previous act, 
which had 
298 sections and 14 schedules spanning over 
800 pages. The simplification aims to make 
the tax laws more accessible and easier to 
understand for the general public. 

2. Introduction of 'Tax Year'

A notable change is the replacement of the 
terms 'previous year' and 'assessment year' 
with a unified 'tax year.' The tax year is defined 
as the 12-month period beginning on April 1 
and ending on March 31. For newly established 
businesses or professions, the tax year will 
commence from the date of setup and 
conclude at the end of that financial year. This 
change aims to streamline tax reporting and 
reduce confusion among taxpayers. 

3. Revised Tax Slabs and Rates

The bill proposes new tax slabs under the 
revised tax regime, providing relief to middle-
income taxpayers. The updated tax rates are 
as follows:
Up to ₹4,00,000: No tax
₹4,00,001 to ₹8,00,000: 5%
₹8,00,001 to ₹12,00,000: 10%
₹12,00,001 to ₹16,00,000: 15%
₹16,00,001 to ₹20,00,000: 20%
₹20,00,001 to ₹24,00,000: 25%
Above ₹24,00,000: 30%
Additionally, individuals earning up to ₹12 lakh 
annually will be eligible for a full tax rebate, 
effectively exempting them from income tax. 

4. Standard Deduction and Salary Deductions

The standard deduction for salaried individuals 
has been retained at ₹50,000 under the old tax 
regime. Taxes paid by employees under Article 
276(2) of the Constitution, pertaining to 
professional tax, will continue to be fully 
deductible. These provisions aim to provide 
consistent relief to salaried taxpayers. 

5. Focus on Digital Assets

The bill introduces stricter regulations for 
virtual digital assets (VDAs), including 
cryptocurrencies and non-fungible tokens 
(NFTs). VDAs are now explicitly included in the 
provisions for 
searches and can be considered part of 
undisclosed income, alongside traditional 
assets like money, bullion, and jewelry. This 
move aims to address tax evasion and bring 
digital 
assets under the tax net. 

6. Empowerment of the Central Board of Direct 
Taxes (CBDT)

A significant shift from the existing law is the 
delegation of certain powers to the CBDT. 
Under the new bill, the CBDT is authorized to 
establish tax administration rules, implement 
compliance measures, and enforce digital tax 
monitoring systems without requiring frequent 
legislative amendments. This change is 
expected to reduce bureaucratic delays and 
enhance the efficiency of tax governance. 

7. Enhanced Compliance and Penalty 
Provisions

The bill emphasizes stricter compliance 
mechanisms, including faceless assessments 
and digital record-keeping. It introduces a 
more structured approach to penalties for non-
compliance, aiming to deter tax evasion and 
encourage timely and accurate tax filings. 
Taxpayers are encouraged to maintain precise 
financial records to navigate the updated tax 
landscape effectively. 

8. Clarity on Specific Tax Provisions

The new legislation provides clearer guidelines 
on various tax matters, including:
Depreciation and Deductions: Modifications in 
business expenditure rules to align with 
current economic practices.
International Taxation: Refined rules 
concerning double taxation avoidance 
agreements and taxation of non-residents.
Taxation of Startups and Special Economic 
Zones (SEZs): Structured tax incentives to 
promote entrepreneurship and investment in 
designated zones.
Taxation of Digital Transactions and 
Cryptocurrencies: Expanded and clearer rules 
for the taxation of digital assets to ensure 
comprehensive coverage.
These clarifications aim to reduce ambiguities 
and potential disputes, fostering a more 
transparent tax environment. 


Implications for Taxpayers

The introduction of the Income Tax Bill, 2025, 
signifies a transformative shift in India's 
taxation framework. Taxpayers are advised to 
familiarize themselves with the new provisions 
to 
ensure compliance and optimize their tax 
planning strategies. The emphasis on digital 
compliance and the inclusion of virtual digital 
assets under the tax purview reflect the 
government's commitment to modernizing the 
tax system in line with evolving economic 
realities.

As the bill progresses through the legislative 
process, it is expected to undergo further 
scrutiny and possible amendments. Taxpayers 
and stakeholders are encouraged to stay 
informed about these developments to adapt 
effectively to the forthcoming changes in the 
tax landscape.