After being passed by both the Lok Sabha and the Rajya Sabha, the new Income Tax Bill 2025 is now moving towards becoming a law. It will come into force from April 2026. Its biggest change is related to TDS. Now, even if the taxpayer misses the stipulated deadline, he will be able to get a refund by filing the ITR. At the same time, individuals or institutions who do not have any tax liability will get a Nil TDS certificate in advance.
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Full tax exemption on pension and gratuity
The new law has given great relief to pensioners and their families. It provides for a standard tax exemption on commuted pension and gratuity. If the employee dies, the gratuity received by the family will be completely tax-free.
Why was the bill introduced?
Finance Minister Nirmala Sitharaman said in the Rajya Sabha that this new law is not just a reform of tax rates, but of language and structure. He said that complex and old language has been removed from it so that the common taxpayer can understand it easily.
Reduction in sections and chapters
The most important thing about the new Income Tax Bill is that the number of sections and chapters has been reduced. The old Act had 819 sections and 47 chapters, which have now been reduced to 536 sections and 23 chapters. The number of words has also been reduced from 5.12 lakh to 2.6 lakh.
Time and effort taken to prepare the bill
Sitharaman said that this bill was prepared in a record six months. It took about 75 thousand man-hours, and the Income Tax Department team worked hard continuously to prepare its draft. It was first introduced in the Budget Session in February 2025.
Opposition walkout and the government’s response
Opposition parties, including the Congress, were not present in the House when the bill was passed. They had walked out demanding a discussion on the issue of special intensive revision of the voter list. The Finance Minister expressed surprise at this and said that the opposition had earlier agreed to the discussion, but later walked out of the House.
The government’s plan
The Finance Minister said that the ministry will soon issue FAQs and simple rules. Also, the computer system of the Income Tax Department will be updated before 2026 so that taxpayers do not face any kind of problem.
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Why is this change important?
After nearly 60 years, such a major reform process has taken place in the Income Tax Act. This change will provide transparency, simplicity, and convenience to taxpayers in accordance with the digital age. Without changing the tax rate, only improving the structure and language will make the tax system clearer and effective.