New Delhi, February 13 (HS): Union Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025 in the Lok Sabha on Thursday. Finance Minister Sitharaman urged Lok Sabha Speaker Om Birla to send it to the Select Committee of the House. Opposition members opposed the bill during its presentation but the House passed a resolution by voice vote to introduce the bill.
Sitharaman, while introducing the Income Tax Bill 2025 in the Lok Sabha, urged Speaker Om Birla to send the draft law to the Select Committee of the House, which will submit its report by the first day of the next session of Parliament. She urged the Speaker to decide on the composition and rules of the proposed panel.
These words of the much-awaited Income Tax Bill, 2025 will change
The new Income Tax Bill, 2025 has been introduced in the Lok Sabha. The 622-page bill introduced by Finance Minister Nirmala Sitharaman will replace the 6-decade-old Income Tax Act 1961. The proposed law will be called the Income Tax Act 2025, it is expected to come into effect in April 2026. The much-awaited bill will replace words like assessment year and previous year with simplified words like tax year, which will further simplify the language of the Income Tax Act. Along with this, unnecessary provisions and clarifications will also be removed from the new law.
The concept of assessment year will be abolished in the new Income Tax Act
Once enacted, the Income Tax Bill 2025 will replace the six-decade-old Income Tax Act 1961. The earlier Income Tax Act has become quite complex over time and after various amendments. Therefore, a new Income Tax Bill, 2025 is being brought in its place. In the new Income Tax Law proposed by the government, the term ‘Financial Year’ (FY) mentioned in the Income Tax Act, 1961 has been replaced by ‘Tax Year’. Along with this, the concept of Assessment Year (AY) has been abolished.
The concept of assessment year abolished in the new law
At present, tax is paid in the assessment year (2024-25) for the income earned in the previous financial year (2023-24). In this new Income Tax Bill, the concept of previous year and assessment year has been removed. The simplified new bill only talks about the tax year. The Income Tax Bill, 2025 contains a total of 536 sections, which is more than the 298 sections of the existing Income Tax Act, 1961. The current Income Tax Act has 14 schedules, which will increase to 16 in the new law.
Many changes have been made in the old Income Tax Act in the last six decades
The number of chapters in the new Income Tax Bill has been kept at 23 like the current law. While the number of pages has been reduced significantly to 622, which is about half of the current bulky Act. The law currently in force includes amendments made during the last six decades. When the Income Tax Act, 1961 was introduced, it had 880 pages.
The new Income Tax Bill will be sent to the Parliamentary Committee
The new Income Tax Bill was approved by the Union Cabinet on Friday. After being introduced in the Lok Sabha, it will be sent to the Parliamentary Committee. The committee will give its recommendations, the government will decide through the Cabinet whether these amendments need to be included. After this the bill will return to Parliament and the government will decide on the date of its rollout. The central government was trying to simplify the Income Tax Act for the last several years. For this, a task force was formed in 2018, which submitted its report in 2019.
Finance Minister had announced the new Income Tax law in the budget
Finance Minister Nirmala Sitharaman had announced a new law to simplify the income tax laws in her budget speech on 01 February 2025. The new Income Tax Bill, 2025 to be introduced in the Lok Sabha has 536 sections. It has 23 chapters, which is 622 pages long. After the passage of this bill, the new Income Tax Law will be more organized and simpler than the current law.
Hindusthan Samachar / Jun Sarkar
