New Income Tax Bill, 2025: The Centre has taken a big step towards making the tax system simple and transparent in the country. The Modi government introduced the ‘Income Tax Bill, 2025’ in Parliament during the budget session this year to replace the existing Income Tax Act, 1961. This Bill, after being introduced in the Lok Sabha in February this year, was sent to the Select Committee of the Lok Sabha. The panel recently submitted an over 4,500-page report with observations and suggestions on the Bill to the government.
Now, the government has plans to table the Bill in the ongoing monsoon session of Parliament on August 11. Experts are of the view that this Bill once passed will be the biggest change in India’s tax system after decades.
Here are 5 major changes in the Income Tax Bill, 2025
1. Number of chapters reduced to 23
The existing Income Tax Act, 1961 has a total of 47 chapters, which became very complex due to multiple amendments. In the new Bill, the number of chapters has been reduced to only 23, making it easier to read and understand. This change is a relief especially for taxpayers and professionals.
2. Number of words reduced by almost half
The old law has 4.1 lakh words, while the new Income Tax Bill, 2025 has only 2.6 lakh words. The government aims to make this law accessible not only to tax consultants but also to common people. The language has been simplified so that compliance increases and disputes reduce.
3. Tax calculation will be easy through formula and table
In the new Bill, instead of complex legal language, such formulas and tables have been given, which can easily calculate tax. This will make it easier for taxpayers to understand how much tax they have to pay and how.
4. The current tax structure will remain intact, but interpretation will be easier
The old tax principles such as taxable income, tax slabs and rebates have been retained in the Bill, so that stability is maintained. However, their presentation and interpretation have been made clearer and easier than before.
5. Old and obsolete provisions removed
There are many provisions in the 1961 law which are no longer relevant. Such provisions have been removed in the new Bill so that only those things remain in the law which are necessary in terms of the current economic and tax structure.
Role of the Lok Sabha Select Committee and the way forward
The Select Committee of the Lok Sabha reviewed this Bill in detail and has given many suggestions to the government. The committee also said that there should be amendments in it according to the digital age, so that technological developments can also be taken into account in the future.
Now, the government will re-introduce this Bill in Parliament on 11 August 2025. If the Bill is passed in the monsoon session, the law could come into effect from 2026.
Summing up…
The Income Tax Bill, 2025 is a comprehensive effort to make the tax system simple, transparent and futuristic. Through this, the government wants to make compliance easier for taxpayers, thereby promoting voluntary tax payment and also increasing tax collection.