The process of making significant changes to the Indian tax infrastructure is about to commence with the presentation of the New Income Tax Bill 2025. The parliamentary committee reviewing this bill will submit its report to the Lok Sabha on Monday. This new bill replaces the six-decade-old Income Tax Act of 1961. The revised bill features fewer sections and is articulated in much simpler language, making it more accessible.
This new tax bill with 285 amendments
As noted in a report by Business Today, the 31-member standing committee led by BJP leader Baijayant Panda was appointed by Lok Sabha Speaker Om Birla on February 13 for examining the new bill after it was presented by Finance Minister Nirmala Sitharaman. The panel's report provides suggestions on 285 amendments within the new tax bill. The report will be presented to the house for further action. Notably, the New Tax Bill is about half the size of the 1961 Income Tax Act.
The bill now comprises 536 sections instead of 816
Designed to minimize litigation, this new simplified bill uses especially simple language. According to the Income Tax Department's FAQ, the number of words in the new bill has been reduced to 2.6 lakhs from the existing law's 5.12 lakhs. Furthermore, the number of sections has been cut from 819 to 536, and chapters from 47 to 23.
From 'Assessment Year' to 'Tax Year'
The New Tax Bill-2025 features 57 tables to clarify tax benefits and TDS/TCS rules, whereas the existing act contains only 18. It also eliminates 1,200 provisions and 900 explanations. One significant change is the proposition of replacing the 'Assessment Year' and 'Previous Year' concepts with a unified 'Tax Year' for taxpayers.
Currently, tax payments are made for the previous year's income in the Assessment Year. For instance, income earned in 2023-24 is taxed in 2024-25. Notably, after its presentation by Nirmala Sitharaman, the bill was referred to a 31-member standing committee, and its review report will be presented on the first day of the Monsoon Session of Parliament, which spans from July 21 to August 21, 2025.
