New Income Tax bill 2025 tabled in parliament. Top 10 highlights you MUST know | Mint

Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in the Lok Sabha on Thursday, 13 February. The much-anticipated new Bill will replace terminology like assessment and the previous year with the easier-to-understand ‘tax year’ as part of a move to simplify language while removing provisos and explanations.

The bill is 622 pages long and comprises 536 sections, 23 chapters, and 16 schedules. It does not introduce new taxes but only simplifies the language of the existing Income Tax Act of 1961, which has 298 sections and 14 schedules.

New Income Tax Bill 2025 tabled in parliament. Top 10 highlights you MUST know

1) The bill’s simple language will help reduce tax litigation, benefiting  taxpayers and the tax department equally.

“Moreover, the language used in the bill is simple as compared to existing acts, which sometimes becomes difficult to understand and is open to different interpretations,” said Mumbai-based investment and tax expert Balwant Jain.

2) “Based on my cursory reading of the new income tax bill, I feel it is merely a good job of editing the existing Income Tax Act. No changes of consequences have been proposed in the bill. It is purely Babu’s product,” added Jain.

3) Looking at the space occupied by the new income tax bill, which is spread over 622 pages against the existing income tax act, which runs into 1647 pages, is a sign of an attempt towards simplification.

“The new bill runs into 536 sections against 298 existing sections; it seems complicated provisions have been broken into small and simple sections for easy interpretation and implementation. Against existing 52 chapters, the bill has only 23 chapters, indicating that redundant chapters have been removed and cohesive matters have been clubbed together to make them simple,” said Jain.

4) Revised Income Tax Slabs:

Income up to ₹12 lakh is now exempt from taxation, with a standard deduction of ₹75,000, effectively making income up to ₹12.75 lakh tax-free for salaried individuals.

5)Simplification of tax laws

The new bill aims to reduce the number of sections by 25-30%, making the tax code more straightforward and user-friendly.

This simplification is expected to ease compliance and reduce disputes.

6) Time limit for filing updated income tax returns

The time frame for filing updated returns is extended from two to four years. This provides taxpayers with an extended period to rectify any omissions or errors.

7) Revised tax slabs and higher exemption limits will give the middle class more money, potentially boosting consumer spending and savings.

8) The new bill, in Clauses 67 to 91, keeps the same categorization but introduces explicit provisions for virtual digital assets and updates beneficial tax rates. This ensures that digital assets, such as cryptocurrency, are covered under a proper tax framework.

9) For non-profit organizations, the previous law, under Sections 11 to 13, provided income tax exemptions for certain charitable purposes but had limited compliance guidelines. The new bill, in Clauses 332 to 355, establishes a more detailed framework, clearly defining taxable income, compliance rules, and restrictions on commercial activities. This introduces a stricter compliance regime while also providing well-defined framework.

Union Budget 2025

The Union Budget, announced on February 1, 2025, introduced significant reforms through the New Income Tax Bill, aiming to simplify the tax structure and provide substantial relief to taxpayers.

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