India’s six-decade-old income tax law is about to get a big makeover. A new Income Tax Bill, 2025, which promises to make paying taxes simpler and clearer, will be placed before the Lok Sabha on Monday.
The new Bill aims to replace the old Income Tax Act, 1961, with a much shorter and easier-to-read law. The parliamentary committee has given 285 suggestions to the new draft bill. The report will be tabled in Parliament at the start of the Monsoon Session, which runs from July 21 to August 21.
WHAT’S CHANGING?
So, what’s new? The government says the new tax law is about half the size of the old one. The number of sections drops from 819 to 536, and the chapters are cut down from 47 to just 23.
The wording has been made simple too, the Bill has about 2.6 lakh words now, compared to 5.12 lakh words in the 1961 law.
LESS CONFUSION, FEWER LEGAL DISPUTES
One big aim of this revamp is to reduce confusion and stop endless court cases. The Bill clears out 1,200 provisos and 900 explanations, which often made the old Act tricky to understand.
Instead, the new version uses plain language and adds more easy-to-read tables, 57 in total, up from just 18 earlier.
‘TAX YEAR’ INSTEAD OF ‘ASSESSMENT YEAR’
For ordinary taxpayers, the biggest change is in how income is taxed each year. The new Bill replaces the idea of a ‘previous year’ and ‘assessment year’ with a simple ‘tax year’.
Right now, you earn income in one year and pay tax on it in the next. But with the new law, you pay tax in the same year you earn it.
A BIG STEP TOWARDS TAX CLARITY
The Bill also makes clearer rules for exemptions, TDS, TCS, and not-for-profit organisations. All this, the government hopes, will cut down on confusion and save everyone time and trouble.
Finance Minister Nirmala Sitharaman, who introduced the Bill in February, said this new law will help bring tax certainty and make things easier for honest taxpayers. If Parliament passes it, this could be one of the biggest changes to India’s tax system in decades.
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