The Income Tax Bill is soon to be presented in the Lok Sabha. A draft of the Income Tax Bill has already been revealed. This 622-page bill includes 536 sections and 16 schedules. The New Income Tax Bill aims to simplify previous tax laws with plain language. Finance Minister Nirmala Sitharaman mentioned in her budget speech that the New Income Tax Bill will be easier for people to comprehend. Let's explore the 10 notable aspects in the draft of the Income Tax Bill.
10 Major Highlights of the Income Tax Bill
Previously, terms like Previous Year, Financial Year, Assessment Year, etc., were used. These have now been streamlined into a singular Tax Year to enhance clarity for taxpayers.
The bill comprises 536 sections, 16 schedules, and 23 chapters, detailing exemptions and new regulations in distinct sections.
The new law, effective from 2025, includes 536 provisions, which is an increase from the 298 sections in the current Income Tax Act of 1961. The existing law has 14 schedules which will increase to 16 in the new legislation.
This law will replace the 1961 Income Tax Act, reducing the previous 880-page document to 622 pages and eliminating most subsections.
The government proposes to implement the new Income Tax Bill by April 2026, initiating the Tax Year on April 1, 2026. It will be known as the Income Tax Act, 2025.
The new bill rearranges tax calculations under tax slabs for individuals, Hindu undivided families, and groups, replacing subsections.
No exemptions or deductions will apply for total income calculation under certain sections or schedules, including home property income and capital gains.
Gratuity received by defense services personnel such as the army, para forces, and other employees are exempt from tax.
Contributions under the Agnipath scheme will remain tax-free, as previously regulated.
Tax exemptions continue for medical expenses, home loans, provident fund, higher education loans, electric vehicles, and insurance.
