The process of major changes in the Indian tax infrastructure is about to begin! The report of the parliamentary committee reviewing the new Income Tax Bill 2025 will be presented in the Lok Sabha on Monday. This new bill will replace the six-decade-old Income Tax Act, 1961. This new bill will have fewer sections than before, and its language will also be simpler than ever. This new tax bill is coming with a total of 285 changes, which aim to make the tax system simple and transparent.
According to a media report, the 31-member committee headed by BJP leader Jayant Panda was appointed by Lok Sabha Speaker Om Birla to examine this new bill. The bill was introduced by Finance Minister Nirmala Sitharaman on February 13. The panel’s report has suggested 285 changes in the new tax bill. Now, a review report in this regard will be presented in the House for further action.
The new tax bill is ‘half’ the old law and extremely simple
If we look at the changes, the new tax bill is almost half the size of the Income Tax Act of 1961. This will prove to be a big relief for taxpayers: now the bill has 536 sections instead of 816 sections. This is a reduction of about 35%. The new simplified bill is designed in simple language to reduce the complexity of matters at the ground level. Taxpayers will now have less difficulty in understanding the rules.
According to the Income Tax Department’s FAQ, the number of words in this new bill has been reduced to 2.6 lakh words compared to 5.12 lakh words in the existing bill. This is a reduction of about 50%, which makes the bill extremely easy to read and understand. Apart from sections, the number of chapters has also been reduced from 47 to 23. All these changes are aimed at making the tax system more accessible and user-friendly, making it easier for taxpayers to follow the rules.
No more ‘Assessment Year’, but ‘Tax Year’
The new Tax Bill-2025 provides 57 tables to understand tax benefits and TDS/TCS (tax deduction/collection at source) rules, while the existing Act had only 18. This will help taxpayers understand various provisions better. Along with this, about 1,200 amendments and 900 sections have been removed, making the bill even more streamlined. Another big and important change is that for taxpayers, this bill proposes to replace the concept of ‘Assessment Year’ adopted till now with a unified ‘Tax Year’.
Currently, tax on the income of the previous year is paid in the assessment year. For example, income earned in 2023-24 is taxed in 2024-25. The concept of ‘tax year’ will simplify this process and make it more straightforward for taxpayers to understand.
The report will be presented in the monsoon session
It is worth mentioning that after being introduced by Nirmala Sitharaman, this bill was referred to a 31-member committee. Now, the review report will be presented on the first day of the monsoon session of Parliament, which will run from July 21 to August 21, 2025.
This report will play an important role in deciding the future direction of Indian tax reforms. If this bill is passed with its proposed simplified and clear form, it can prove to be a new dawn for the country’s economy and taxpayers. It will ease tax compliance, reduce litigation, and increase the ease of doing business in India.