New Income Tax Bill 2025: Finance minister Nirmala Sitharaman introduced the new Income Tax Bill in the Lok Sabha; know what will change
New Income Tax Bill 2025: Finance minister Nirmala Sitharaman introduced the new Income Tax Bill 2025 in the lok sabha today. The announcement of making a new law to simplify the income tax laws was made by Finance minister Nirmala Sitharaman in her budget speech on february 1, 2025. After introducing the bill in the lok sabha, the Finance minister urged Speaker om birla to send it to the Select Committee of the House. Let's know more about this.
Union Finance minister Nirmala Sitharaman on Thursday introduced the Income Tax Bill, 2025 in the lok sabha and urged Speaker om birla to send it to the Select Committee of the House. Opposition members opposed the bill during its introduction, but the house passed a motion by voice vote to present it.
While introducing the bill, Sitharaman urged 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. She urged the Speaker to decide on the composition and rules of the proposed panel.
The much-awaited bill will replace words like "assessment year" and "previous year" with simplified words like "tax year", which will simplify the language of the Income Tax Act. Along with this, unnecessary provisions and clarifications will also be removed from the new law.
The Finance minister had announced the new Income Tax Act in her budget speech.
The announcement of making a new law to simplify the income tax laws was made by Finance minister Nirmala Sitharaman in her budget speech on february 1, 2025. This bill has also been approved by the Union Cabinet. The new Income Tax Bill to be introduced in the lok sabha has 536 sections. It has 23 chapters and is 622 pages long. After the passage of this bill, the new Income Tax Act will be more organized and simpler than the current law.
The concept of assessment year will be abolished in the new Income Tax Law.
Once enacted, the Income Tax Bill 2025 will replace the six-decade-old Income Tax Act 1961. The earlier law has become quite complex over time and after various amendments, so a new Income Tax Bill is being brought in its place. In the new law proposed by the government, the term 'previous year' (FY) mentioned in the Income Tax Act, 1961 has been replaced by 'tax year'. With this, the concept of assessment year (AY) has been abolished.
The concept of assessment year will be abolished in the new law.
Currently, for income earned in the previous year (2023-24), tax is paid in the assessment year (2024-25). In this new bill, the concept of the previous year and assessment year has been removed and the simplified bill only talks about tax year. The Income Tax Bill, 2025 contains 536 sections, which is more than the 298 sections of the current Income Tax Act, of 1961. The current law 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.
However, the number of chapters in the new Income Tax Bill has been kept at 23, just like the current law. The number of pages has been reduced significantly to 622, which is almost half of the current bulky Act. The law that is currently in force includes the amendments made during the last six decades. When the Income Tax Act, of 1961 was introduced, it had 880 pages.
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