On Thursday, Finance Minister Nirmala Sitharaman tabled the New Income Tax Bill, 2025, in Parliament during the Budget session. The proposed legislation follows the government’s push for tax reforms, comprising major relaxations for the middle class. The bill is expected to streamline the existing provisions and simplify compliance for taxpayers.
According to the media reports, the bill is likely to be referred to a Select Committee for further examination. Previously, Finance Minister had hinted at extensive parliamentary discussions before finalising the changes. “The process is that the committee gives its recommendations, it comes back, and then the government, through the Cabinet, takes a call whether these amendments are to be taken in,” said Finance Minister.
Last week, the Union Cabinet cleared the bill, reinforcing the government’s commitment to overhauling the Income-tax Act, 1961. This move aligns with the promise made in the July 2024 Budget, which proposed a review of tax laws to make them concise, lucid, and less prone to disputes.
One of the major changes in the New Income Tax Bill, 2025, is the introduction of the ‘tax year’, a measure aimed at addressing chaos around the existing assessment year and financial year. Many taxpayers struggle with the difference between these terms while filing returns, and the new framework aims to simplify this process. However, the financial year will remain unchanged, continuing from April 1 to March 31 as per existing practice.
Additionally, several sections of the tax code may be revised. Presently, Section 139 governs income tax return filing, while the new tax regime operates under Section 115BAC. The bill is expected to modify or replace these provisions to enhance clarity and efficiency.
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