The Income Tax Bill 2025 was introduced in Parliament on February 13, 2025. The new income tax bill is aiming to replace the six-decade-old Income Tax Act of 1961. Let’s understand the latest changes introduced in the New Income Tax Bill 2025.
Introduction of the ‘Tax Year’
The new bill simplifies the tax system by introducing a single “tax year” instead of using separate terms like “previous year” and “assessment year.” This tax year will always start on April 1 and end on March 31 of the next year.
For newly started businesses or professions, their first tax year will begin on the day they start operating and will end on the next March 31. For Instance, if a person starts a business on July 15, 2025, their tax year will be from July 15, 2025, to March 31, 2026. From the next year onwards, their tax year will follow the regular cycle of April 1 to March 31.
Revised Income Tax Slabs
The Income Tax Bill 2025 has proposed the new income tax slab such as:
- Income up to ₹4 lakh: No tax
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%
It is a most welcomed update for middle-class taxpayers as restructuring has increase the tax-free income.
Read Also: Income Tax Slab 2025: Big Relief for Taxpayers
Simplification of Tax Language and Structure
The new income tax bill has reduced the existing law from 800 pages to 662 pages. It has removed redundant sections and replaced complex provisions with clear language. Thus, it aims to reduce legal disputes and make the tax laws more accessible to taxpayers.
Strict Regulations for Virtual Digital Assets (VDAs)
The bill includes cryptocurrencies and non-fungible tokens (NFTs)—under provisions for searches and undisclosed income.
Enhanced Powers for Tax Authorities
The new tax bill 2025 proposes granting tax authorities broader access to taxpayers’ electronic records, including emails, social media accounts, and online financial accounts during investigations.
Important Impact of New Tax Bill on Taxpayers
- Simplifies tax filing – Taxpayers no longer need to deal with separate terms like “previous year” and “assessment year.”
- Easier tax planning – Individuals and businesses can align their income and expenses within a single tax year.
- Streamlined tax assessments – Reduces confusion in calculating taxable income and ensures consistency in financial reporting.
- Better compliance – Businesses and professionals will find it easier to track their earnings and will be able to do ITR Filing on time.
- More clarity for new businesses – Startups and new businesses can manage their taxes based on their actual operational period in the first year.
Key Highlights of Budget 2025 | Impact on Startups & Businesses
If you have any doubts or need further clarification regarding the New Income Tax Bill 2025, feel free to consult our experts at: 8881-069-069.
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