Wed Feb 12 16:49:57 UTC 2025: ## New Income Tax Bill to Replace Six-Decade-Old Act

**New Delhi, February 13, 2025** – A sweeping new Income Tax Bill, 2025, was introduced in the Lok Sabha today, aiming to replace the outdated Income Tax Act of 1961. The 622-page bill, comprising 536 sections and 23 chapters, simplifies the tax system by replacing the “previous year” and “assessment year” terminology with a single “tax year,” streamlining tax calculations.

While the number of sections has increased from 298 to 536, the bill’s overall length is significantly reduced from the original 880 pages of the 1961 Act, which had become cumbersome due to numerous amendments over the years. The increase in sections reflects a more structured approach incorporating digital governance and modern compliance mechanisms, according to AMRG & Associates Senior Partner Rajat Mohan.

Key changes include greater clarity on stock option (ESOP) taxation, incorporation of 60 years of judicial pronouncements, and a significant delegation of power to the Central Board of Direct Taxes (CBDT). The CBDT will now have the authority to implement tax administration rules and compliance measures without requiring constant parliamentary approval, aiming to expedite processes and improve efficiency.

The bill, which resulted from a comprehensive review involving public consultations and feedback from 6,500 stakeholders, also introduces significant tax relief for lower-income earners. Those earning up to ₹12 lakh annually will be exempt from income tax (excluding special income), further enhanced by a standard deduction of ₹75,000, effectively providing a tax-free threshold of ₹12.75 lakh. The revised tax slabs are expected to benefit higher earners from the next financial year.

The bill will now be sent to a parliamentary standing committee for further review before becoming law. Finance Minister Nirmala Sitharaman had announced the bill’s introduction in the 2025-26 budget, fulfilling a commitment to modernize India’s income tax system.

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