Wed Feb 12 17:40:59 UTC 2025: ## New Income Tax Bill 2025 Headed to Lok Sabha

**New Delhi, February 13** – India is poised for a significant tax overhaul as the new Income Tax Bill 2025 is set to be tabled in the Lok Sabha today. The 622-page bill, announced by Finance Minister Nirmala Sitharaman in her February 1st Budget speech, aims to replace the 60-year-old Income Tax Act of 1961. The proposed legislation, once passed, will be known as the Income Tax Act, 2025, and is slated to come into effect in April 2026.

The bill, already approved by the Union Cabinet, seeks to simplify the tax system through clearer language and a reduction in the number of sections by 25-30%. Experts, such as Rohinton Sidhwa of Deloitte India, view this as a modernization effort, but its success depends on smooth implementation and taxpayer adaptation. The bill introduces a “tax year” concept, replacing the previous “previous year” and “assessment year” terminology.

Key changes include revised tax slabs, with zero tax for those earning up to ₹12 lakh (due to a standard deduction), and a simplification of concepts like capital gains calculations through the use of formulas. While the new tax regime offers lower rates, it provides fewer deductions than the old regime. Specific exemptions remain for certain allowances and retirement benefits but HRA exemptions are removed. The bill also includes updated tax audit and filing deadlines.

The bill has already undergone significant revisions, incorporating over 6,500 public suggestions focusing on simplification, litigation reduction, compliance improvements, and the removal of redundant provisions. The Central Board of Direct Taxes (CBDT) gains more autonomy to implement tax administration rules and digital monitoring systems.

Despite increasing the number of sections to 536 (compared to 298 in the current act), the overall length of the bill is significantly shorter— 622 pages versus the current act’s 823 pages. After Lok Sabha passage, the bill will be sent to the Parliamentary Standing Committee on Finance for further review before final enactment.

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