New-Income Tax Bill 2025 – Simplification ~Consolidation ~ Clarity

Income Tax Bill 2025 – Key Changes

The proposed Income Tax Bill, 2025 is a comprehensive revamp of the Income-tax Act, 1961, focusing on simplification, clarity, and structural reorganization while retaining the core taxation principles.

Key Changes:

1. The term “previous year” has been replaced with the expression “tax year”
2. The term “Non-Profit Organisation (NPO)” has been used instead of “trust,” and there are more than 20 provisions for the registered NPO
3. Business Income: The combined provision now allows fair and proportionate deductions when premises, machinery, plant or furniture are partially used for business or professional purposes.
4. Clubbing of Income: As per Income Tax Act, 1961, the clubbing provisions do not apply if the spouse possesses ‘technical or professional qualifications’, and the income is solely attributable to the application of his or her technical or professional knowledge and experience. The ITB proposes to remove the first condition and include the term “qualification” in the second condition alongside knowledge and experience. Thus, income could be attributable to the application of technical or professional knowledge, experience, and qualifications.
5. Assessments: Section 144C(6) of the ITA lists specific elements the DRP must consider when issuing directions. The ITB, instead of listing out specific items to consider, focuses on the structure and content of the directions. It requires that the directions be in writing and must state the points of determination, the decision on each point, and the reasons for those decisions.
6. Certificate for Lower TDS: The ITB broadens this provision, enabling a person to seek a lower TDS certificate for all types of payments, against specific payments prescribed under IT Act 1961.
7. Opportunity of being heard before Penalty: The mandatory requirement of giving an opportunity of being heard to the assessee before imposing a penalty has been proposed to be removed in the ITB.
8. Search and Seizure: The expression “any books of account or other documents” has been changed to “any books of account or other documents or any information stored in any electronic media or a computer system” in the ITB
   
   

The following is Summary of overall changes in structure:

Key changes include consolidation of scattered provisions, elimination of redundant sections, reduction of legal jargon, and improved readability through tabular formats and formula-based explanations. The Bill significantly reduces word count across chapters, restructures provisions for logical flow, and merges overlapping sections to enhance compliance ease. Complex provisions like exemptions, presumptive taxation, clubbing of income, and TDS/TCS have been streamlined, while new definitions, such as “Tax Year,” replace outdated terminology. The Bill does not introduce major policy shifts but ensures a taxpayer-friendly approach by making tax law easier to interpret, reducing ambiguities, and aligning with modern tax administration practices.

Simplification – Consolidation – Clarity

The changes are divided into mainly 3 attributes for ease of understanding:

1.  Simplification

2.  Consolidation

3.  Clarity

This new tax law revision ensures Simplification by reducing complexity, Consolidation by grouping related provisions together, and Clarity by using formulas, structured tables, and well-defined terms. These improvements make compliance easier, more transparent, and taxpayer-friendly without introducing major policy changes.

Resources:

1. New Income Tax Bill 2025 related documents uploaded on Government Website:
   

            * Income Tax Bill 2025
            * Corrigenda to Income Tax Bill 2025
            * Nevigator – New Income Tax Bill
            * General FAQs and Broad Scope
            * FAQs on Income Tax Bill 2025

    Click https://incometaxindia.gov.in/Pages/income-tax-bill-2025.aspx

2. Taxmann’s Analysis of ITA to ITB: 50+ important Changes