Simplified Income Tax Bill brings in 'tax year' concept

New Income Tax Bill to have 622 pages, 536 sections; likely to be tabled in Parliament today

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The much-anticipated new income tax Bill will replace terminologies like assessment and previous year with easier to understand 'tax year' as part of a move to simplify language while removing provisos and explanations.

The Income Tax Bill, 2025, which is likely to be introduced in Parliament on Thursday, will replace 298 sections and 14 schedules in the six-decade-old voluminous legislations, with a 622-page new law enshrined in 526 sections, 23 chapters and 16 schedules.

The Bill introduces a new concept of 'tax year' as the 12-month period beginning from April 1. This would replace the present concept of assessment and previous year.

Currently, income earned in the previous year (PY), say in the year April 2024 to March 2025, will be assessed in assessment year (AY) 2025-26.

The new Bill will come into effect from April 1, 2026, after it is vetted by the Standing Committee and cleared by Parliament.

The new Bill has omitted redundant sections, like those relating to Fringe Benefit Tax. The Bill is free from explanations or provisos, thereby making it easier to read and comprehend.

Also, the word 'notwithstanding,' which was used excessively in the Income Tax Act, 1961, has been done away with in the new Bill and almost everywhere replaced with the term 'irrespective.'

The Bill uses shorter sentences and has been made reader-friendly with the use of tables and formulae. Tables have been provided for provisions relating to TDS, presumptive taxation, salaries, and deductions for bad debt.