New Income Tax Bill 2025: 10 Key Highlights Every Taxpayer Must Know

The Indian Parliament recently witnessed the introduction of the Income Tax Bill 2025, aimed at simplifying the country’s tax structure. Presented by Finance Minister Nirmala Sitharaman, the 622-page bill replaces complex terminology with straightforward language and brings clarity to existing provisions without imposing new taxes. Here are the top 10 highlights taxpayers need to know:

1. Simplified Language: The bill introduces simpler terms like ‘tax year’ instead of ‘assessment year’ or ‘previous year’ to reduce confusion. This change is expected to minimize tax disputes and make compliance easier.
2. Structure and Scope: Spanning 622 pages, the bill comprises 536 sections, 23 chapters, and 16 schedules. It simplifies numerous provisions from the 1961 Income Tax Act, which contained 298 sections across 14 schedules.
3. Wider Impact: The bill impacts various taxpayer groups, including individuals, businesses, and non-profits, by clarifying existing rules and removing redundant provisions.
4. Revised Income Tax Slabs: The new slabs offer relief to salaried individuals by exempting income up to ₹12 lakh. With a standard deduction of ₹75,000, income up to ₹12.75 lakh becomes tax-free, providing a potential boost to consumer spending.
5. Simplified Tax Code: The number of sections has been reduced by nearly 30%, with complicated provisions broken down into simpler segments for better understanding and implementation.
6. Extended Time for Filing Returns: Taxpayers now have up to four years to file updated returns, an increase from the previous two-year limit. This extension helps individuals rectify errors and omissions more effectively.
7. Introduction of ‘Tax Year’: The term ‘tax year’ replaces traditional terms like ‘financial year’ and ‘assessment year’, simplifying references to income periods.
8. Focus on Virtual Digital Assets: Clauses 67 to 91 introduce clear definitions and tax guidelines for virtual digital assets, such as cryptocurrency, recognizing their growing role in the modern financial system.
9. Revised Rules for Non-Profits: Clauses 332 to 355 establish a more detailed compliance framework for charitable organizations, outlining income sources and permissible activities to maintain tax-exempt status.
10. Support for Startups and Green Investments: Clauses 11 to 154 offer incentives for startups and renewable energy sectors, aligning with the government’s vision for sustainable economic growth.

The bill is currently under review by a select parliamentary committee, which is expected to present its findings in the next session. The proposed changes are anticipated to simplify compliance, reduce litigation, and support India’s evolving economic landscape.

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