• Notification Date: 15-02-2025
• Notification No: N/A

New Income Tax Bill 2025: The Road to Simpler Taxation

The long-awaited Income Tax Bill 2025, which will come into effect from April 1, 2026, will simplify India's tax system and make it taxpayer-friendly. The new bill, which has been introduced in the Lok Sabha, will simplify the complex tax provisions, stop litigation, and improve clarity for taxpayers as well as the authorities.

Among the notable changes are replacing vague terms like 'previous year' and 'assessment year' with a single 'tax year', lessening the intricacy of tracing deadlines and compliance. The bill also simplifies provisions on salary perquisites, presumptive taxation, and TDS/TCS (withholding tax), moving elaborate sub-sections into independent schedules to increase clarity.

Significantly, taxpayers will have the option to select the old and new regimes of taxation, carrying forward exemptions and deductions of the old regime, thus giving people the option of having the best of both worlds.

The new bill will also simplify the process of seeking lower withholding tax certificates for all TDS/TCS provisions, reducing compliance burden.

In general, the bill seeks to make the bill format more specific and transparent, less ambiguous to taxpayers and less expensive in administration, and to facilitate the application of the new law. The reform will most likely enhance tax certainty and reduce controversy in the long run.