As anticipated, taxpayers would need to prepare for several changes when Finance minister Nirmala Sitharaman introduced the revised Income Tax Bill in the lok sabha on february 13.
Since the bill is going to a select committee, it will be some time before it becomes law. "A select committee shall be constituted on the income tax bill, which will submit its report on the first day of the next session," stated the minister. According to the present proposal, it will take effect on april 1, 2026.
The measure aims to simplify the wording to facilitate compliance, but it makes no changes to the capital gains tax structure or income tax rates or slabs.
Deductions from Section 80C now go to Clause 123.
'Section 80C' deductions are well known to all taxpayers. This section covers investments in public provident funds (PPF), equity-linked savings plans (ELSS), life insurance premiums, National Pension System (NPS) tax-saver deposits, and more.
Under 80C, several instruments qualify for deductions, with a Rs 1.5 lakh ceiling.
Such deductions will fall under section 123, or clause 123, of the new bill.
"An individual or a Hindu undivided family, shall be allowed a deduction of the whole of the amount paid or deposited in the tax year, being the aggregate of the sums enumerated in Schedule XV, but not exceeding one lakh fifty thousand rupees, while computing the total income for that year, subject to the conditions specified in that Schedule," the legislation states.
Section 80C of the current Income Tax Act of 1961 will be equivalent to Section 123 of the new Income Tax Bill. Schedule XV, which is a component of the Bill and offers thorough explanations of the line-by-line items (tax-saver avenues) under section 80C, should be read with it, according to mayank Mohanka, founder and director of the tax consulting service TaxAaram.com.
Since the bill is going to a select committee, it will be some time before it becomes law. "A select committee shall be constituted on the income tax bill, which will submit its report on the first day of the next session," stated the minister. According to the present proposal, it will take effect on april 1, 2026.
The measure aims to simplify the wording to facilitate compliance, but it makes no changes to the capital gains tax structure or income tax rates or slabs.
Deductions from Section 80C now go to Clause 123.
'Section 80C' deductions are well known to all taxpayers. This section covers investments in public provident funds (PPF), equity-linked savings plans (ELSS), life insurance premiums, National Pension System (NPS) tax-saver deposits, and more.
Under 80C, several instruments qualify for deductions, with a Rs 1.5 lakh ceiling.
Such deductions will fall under section 123, or clause 123, of the new bill.
"An individual or a Hindu undivided family, shall be allowed a deduction of the whole of the amount paid or deposited in the tax year, being the aggregate of the sums enumerated in Schedule XV, but not exceeding one lakh fifty thousand rupees, while computing the total income for that year, subject to the conditions specified in that Schedule," the legislation states.
Section 80C of the current Income Tax Act of 1961 will be equivalent to Section 123 of the new Income Tax Bill. Schedule XV, which is a component of the Bill and offers thorough explanations of the line-by-line items (tax-saver avenues) under section 80C, should be read with it, according to mayank Mohanka, founder and director of the tax consulting service TaxAaram.com.
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