Thu Feb 13 09:05:28 UTC 2025: ## India to Introduce Simplified Income Tax Bill, Replacing 63-Year-Old Act

**New Delhi** – The Indian Parliament is set to witness the introduction of a new Income Tax Bill (2025) today, marking a significant overhaul of the existing Income Tax Act of 1961. The draft, released Wednesday, reveals a simplified and taxpayer-friendly system aimed at replacing the 63-year-old legislation. Key features of the new bill include:

* **Streamlined Structure:** The new bill, with 622 pages (down from 880 in the 1961 Act), aims for greater clarity and accessibility for taxpayers. It features 536 sections and 23 chapters.

* **Introduction of ‘Tax Year’:** The concept of “Tax Year” replaces the previous “Assessment Year” and “Previous Year,” aiming to reduce taxpayer confusion. The tax year will align with the financial year (e.g., April 1, 2025 – March 31, 2026 will be Tax Year 2025-26).

* **Standard Deduction:** Salaried individuals will receive a standard deduction of ₹50,000 under the old regime and ₹75,000 under the new regime. Tax slabs remain unchanged, with rates announced in the budget. No tax will be levied on income up to ₹4 lakhs, with rates increasing progressively thereafter.

* **Enhanced CBDT Powers:** The Central Board of Direct Taxes (CBDT) will gain the authority to independently launch new tax schemes, eliminating bureaucratic delays.

* **Capital Gains Rates Unchanged:** Short-term capital gains tax (for holdings less than 12 months) will remain at 20%, while long-term capital gains tax will remain at 12.5%.

* **Tax Benefits Maintained:** Deductions for pensions, NPS contributions, insurance, retirement funds, gratuity, and PF contributions will continue. ELSS mutual fund investments will also retain tax benefits.

* **Stricter Penalties for Tax Evasion:** The bill introduces harsher penalties for tax evasion, including potential lawsuits, increased interest and fines, and account seizures for those attempting to hide income.

* **Mandatory E-KYC and E-Filing:** The bill aims to digitize and increase transparency in tax payments through mandatory e-KYC and online tax filing.

* **Agricultural Income Exemption:** Agricultural income will remain tax-exempt under certain conditions. Religious trusts, charitable organizations, and electoral trusts will also continue to receive tax exemptions.

* **Dispute Resolution:** The bill’s simplified language and clear regulations aim to reduce ambiguity and minimize tax disputes between taxpayers and the government.

The new Income Tax Bill 2025 promises a more modern, efficient, and transparent tax system for India.

Read More