Income Tax Bill 2025: The government has proposed to bring a new income tax law by making several important changes in the Income Tax Bill (Income Tax Bill 2025). This new law will come into force from April 1, 2026, which will be called the Income Tax Act 2025. In this, the government has simplified many things, so that people do not have to face problems. Every taxpayer needs to know about these 5 major changes so that they can plan their finances correctly.
The tax year in place of the assessment year and previous year
Assessment year and previous year have been abolished in the new Income Tax Bill. Now there will be only the tax year, which will be used for the financial year for which tax is being paid. Let us tell you that the tax year will start from April 1 and end on March 31. This change is an attempt to make the tax system consistent with the financial year.
Changes for government employees
Under the Income Tax Bill, which will come into effect from April 1, 2026, government employees will no longer get entertainment allowance deductions in salary. Till now only government employees were eligible for this deduction. This deduction is the lowest of these 3 amounts- one-fifth (1/5) of the basic salary and the amount of entertainment allowance received is Rs 5000. This change will affect the tax liability of government employees.
Exemption on family gifts
Under Section 56(2)(x) of the Income Tax Act, if the gift is received from family members, it is not taxable. Please note that this gift can be only from the mother or father’s family. If the gift is received from anyone other than these, then tax exemption will not be available on it. This clarification will help in understanding the tax rules on gifts.
Strict penalty on offenses under section 276CCC
Section 276CCC of the Income Tax Act applies in case of failure to file income tax return in certain cases. Now under section 276CCC, it will be considered a non-cognizable offence. It can only be initiated with the permission of the concerned authorized officer. If a person is found guilty of the offense again under this section, he can be sentenced to 6 months to 7 years and can also be fined. This change will make tax compliance stricter.
Rules for filing ITR and right to seek information
The Income Tax Bill does not keep the provision of the seventh subsection of the Income Tax Act, which is used to determine the circumstances under which filing of ITR would be necessary. For example, foreign travel business turnover or gross receipts exceeding a certain limit, even if the person’s annual income is less than the minimum tax exemption limit.
Now the Central Board of Direct Taxes (CBDT) has been given the right to determine the circumstances under which filing of ITR would be necessary. Along with this, CBDT can now also seek information related to the taxpayer’s credit card, over-limit expenses, and business location. This will give CBDT the power to better enforce tax compliance.