New Income Tax Bill Tabled In Lok Sabha By Nirmala Sitharaman
On Thursday, Union Finance Minister Nirmala Sitharaman tabled a groundbreaking piece of legislation in the Lok Sabha – the New Income Tax Bill, 2025. This bill is not just another amendment; it’s a comprehensive overhaul intended to make tax laws accessible to the common person by simplifying the language and structure of taxation in India.
During her Budget speech on February 1, Sitharaman had hinted at this significant reform. The goal? To strip away the complexity of tax jargon and lengthy, confusing provisions that have made the current Income Tax Act, 1961, a daunting read for many.
One of the key changes introduced is the concept of a ‘Tax Year’, which replaces the more intricate terms ‘Previous Year’ and ‘Assessment Year’. This move is expected to make the tax-filing process less confusing, aligning with the financial year for taxation purposes.
The new bill, while not introducing new taxes, focuses on streamlining the existing tax framework. It proposes to cut down the legal text by half, aiming for clarity with fewer sections, less complicated sentencing, and more straightforward explanations. This reduction in verbosity is anticipated to lower the number of legal disputes related to tax interpretations, which have plagued taxpayers for years.
With 536 sections, 23 chapters, and 16 schedules spread across 622 pages, the new bill is more expansive in its content but simpler in its delivery compared to the 298 sections, 23 chapters, and 14 schedules of the existing act. Sitharaman also suggested that penalties for some tax offenses might be reduced, fostering a more forgiving tax environment that encourages compliance rather than fear of punitive action.
You Can Download New Income Tax Bill PDF Here
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The bill will undergo scrutiny by a select committee of the Lok Sabha, proposed by Sitharaman herself, which will review and potentially refine the legislation before it can be finalized. This committee’s findings will be crucial as they will influence the bill’s final shape and effectiveness.
If passed, this new tax system will be implemented from the financial year 2025-26, affecting taxpayers starting from the assessment year 2026-27. This timeline gives both the government and taxpayers time to adapt to the new system, which promises to be less daunting and more equitable.
