Income Tax Act 2025: The new Income Tax (I-T) law got the president’s assent on Friday. The revised legislation is a simpler and refined version of the existing Income Tax Act, 1961.
When Finance Minister Nirmala Sitharaman announced the new Income Tax (I-T) Act during the Budget speech on 1 February 2025, she stated that the new income-tax bill will carry forward the same spirit of Nyaya (justice).
“The new bill will be clear and direct in text, with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation,” she said during the budget speech in Parliament.
The new law differs from the existing one on several counts. It is concise, with fewer words and tax provisions. The number of sections has been reduced from 819 to 536.
Now, the taxpayers would not need to cross-reference different provisions too much. It has also done away with previous and assessment year and replaced with it ‘tax year’.
We spoke to a few experts to find out if their expectations were met with the new legislation.
Easy language
While there is no doubt that the law’s language is simple, the law has not undergone a change, according to experts.
Aarti Raote, Partner, Deloitte India, opined, “The objective of the new tax bill is to make the Income tax simple, remove errors and make it easier to implement. For salaried taxpayers, there is no major change except for rearranging the relevant sections in a simpler format. There is, of course, an extension of deduction for the pre-construction period in let-out house properties, which will benefit taxpayers.”
OP Yadav, Tax Evangelist at Prosperr.io and former principal commissioner of income tax, said the new Income Tax Act is simpler, but it does not make any new policy announcements.
Is the law simpler?
Additionally, the new tax law has phased out redundant provisions and the word count has been trimmed, but does that make the tax law easier to comply with?
“Overall, the number of sections has been reduced. That said, these improvements are largely structural and linguistic. While they make the law easier to read and reference, they do not significantly simplify the process of applying or interpreting the law in practice — unlike the major clarity achieved during the rollout of GST,” says Chandni Anandan, Tax Expert at ClearTax.
Rohinton Sidhwa, Partner, Deloitte India, says, “The bill drastically reduces the number of sections (from 819 in the 1961 Act to 536), eliminates archaic language, and streamlines the Act for easier reading and less litigation. While tax rates and slabs remain unchanged from those announced in the Union Budget 2025, the new law broadens the scope for modern economic activities (including explicit provisions for taxing cryptocurrencies and virtual digital assets).”
“Another important change is that taxpayers can now claim refunds for TDS even if they file returns after the statutory deadline—a reversal from earlier drafts of the bill, which restricted refunds only to on-time filers. Also, there is ‘nil’ TCS on Liberalised Remittance Scheme (LRS) remittances for overseas education financed by financial institutions, making it less costly and more flexible for students and families,” he added.
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