Finance Minister Nirmala Sitharaman will introduce the new Income-Tax Bill 2025 in the Lok Sabha on February 13. The Bill aims to consolidate and amend the taxation laws of the country.
“Smt. Nirmala Sitharaman to move for leave to introduce a bill to consolidate and amend the law relating to income-tax,” official list of business for the parliament session scheduled for Thursday reads.
The new income tax bill seeks to replace the six-decade-old Income Tax Act of 1964 which has become increasingly voluminous as amendments were added over the years. The new Bill does not introduce any new taxes but only simplifies the language of the existing Income Tax Act. The new law is expected to come into effect from the beginning of April 2026.
Removal of ‘obsolete’ sections
According to experts, the new Bill will eliminate several ‘obsolete’ sections of the existing Act, reduce litigation, and improve compliance. It is also expected to simplify the tax laws — ensuring they are more transparent, easier to interpret and taxpayer friendly.
Income-Tax Bill 2025: Simplified language
The bill will also replace terminologies such as assessment and previous year with a simplified concept of ‘tax year’ as part of the move to make the document easier to understand. Tax year — the 12-month period beginning from April 1 — will replace the present concept of assessment and the previous year. Currently, income earned in the ‘previous year’ is being assessed in the ‘assessment year’. To give an example, income earned between April 2024 and March 2025 is now assessed in FY 2025-26.
The new bill has omitted redundant sections, like those relating to Fringe Benefit Tax. It is free from ‘explanations or provisos’, thereby making it easier to read and comprehend. The word ‘notwithstanding’—which was used excessively in the existing Income Tax Act—has been done away with in the new Bill. It has been replaced almost everywhere with the term ‘irrespective’.
(With inputs from agencies)