The Finance Minister of India will present a New Income tax Bill in the Parliament today, i.e., on 13-02-2025 at 11 am. The new bill is said to bring significant changes to the existing Income Tax Act 1961, making it simpler and easier for the general taxpayer to comprehend.
Moreover, according to the Economic Times, the new 622 paged income tax bill will have 23 chapters, 16 schedules, and around 536 clauses, whereas the previous income tax act had merely 298 sections. After successfully passing the review from the standing committee, the bill will come into effect on April 1, 2026.
However, unlike its predecessor, the Direct Tax Code in 2009 & 2010, the Income Tax Bill 2025 maintains the existing structure while implementing major updates.
Income-Tax Bill 2025 vs Direct Tax Code
The DTC Bill 2010 suggested big changes like standard tax slabs, lower corporate tax rates, and a simpler way to tax capital gains. It focuses on lowering the corporate tax to the top 25% and a broad-based tax structure. Moreover, the DTC focused on electronic filing and introduced Controlled Foreign Corporation (CFC) rules.
Plus, it also focused on uniformity across various asset classes. But worries about revenue loss, investor pushback on capital gains reforms, and opposition to stricter anti-avoidance rules caused multiple delays.
Also read, Before Budget 2025, FM to Table the Economic Survey
After a new government took over in 2014, the focus shifted to gradual tax reforms instead of a complete overhaul, and the DTC was never implemented. Instead, later budgets made tax changes within the existing system, eventually leading to the Income Tax Bill 2025.
The New Income Tax Bill 2025 focuses on modernising the existing legal legislation while maintaining a progressive taxation system with revised slabs and deductions. However, the corporate tax in the bill has largely remained unchanged, though incentives are provided to specific industries.
The new bill introduced faceless assessments, digital compliance to curb corruption, and taxation on digital economy assets like cryptocurrency. Plus, the General Anti-Avoidance Rule (GAAR) underwent some refinements along with residency rules for NRI.
