Thu Feb 13 07:02:15 UTC 2025: ## India Unveils New Income Tax Bill, Replacing Six-Decade-Old Act

**New Delhi** – India is set to replace its six-decade-old Income Tax Act, 1961, with the Income-Tax Bill, 2025, effective April 1, 2026. While initially proposed as a complete overhaul (similar to the shelved Direct Taxes Code), the new bill largely retains the existing structure but introduces significant refinements.

The bill focuses on simplification and modernization, streamlining processes to enhance compliance and curb tax evasion. Key changes include:

* **Digitalization:** A shift towards faceless assessments and digital compliance aims to reduce corruption.
* **Digital Asset Taxation:** The bill introduces specific provisions for taxing virtual digital assets (VDAs), including cryptocurrencies and NFTs, a significant departure from the previous Act.
* **Tax Year Concept:** The introduction of a single “tax year” replaces the confusing “assessment year” and “previous year” terminology, aligning with international practices.
* **Refined GAAR:** The General Anti-Avoidance Rule remains but with improvements for effective implementation.
* **Updated Residency Rules:** Changes are made to residency rules, particularly for Non-Resident Indians (NRIs).

While the bill modernizes tax legislation, it maintains a progressive tax system with revised tax slabs and deductions. Corporate tax rates largely remain unchanged, although sector-specific incentives are introduced. Unlike earlier proposals for a uniform capital gains tax, the new bill retains distinctions between investment types.

Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co., commented that the bill, at first glance, doesn’t introduce major policy shifts but concentrates on simplification and consolidation. The government believes these changes will improve the readability and understanding of India’s tax laws.

Read More