India’s Income Act of 1961 has long served as the backbone of the India Taxation system. Over the decades, numerous amendments, and additions have made it more complex and this leads to confusion and disputes. By recognising the need for a unified, transparent and simple framework, the Government introduced New Income Tax Bill 2025. This bill aims to modernise the tax laws and enhance the clarity. This new bill in Lok Sabha was passed on February 13th, 2025. Let’s know what changes are there in this bill.
New Income Tax Bill 2025
The New Income Tax Bill 2025 is a comprehensive reform of India Tax legislation. This focuses on a simple and modern tax system. Key aspects of this bill include Unified Tax Year, No changes in tax slabs, rates and return filing, no changes in income heads, Consolidation of TDS provisions, income computation, virtual digital assets, and more. These all changes aim to make a more transparent tax legislation. This new bill will be applicable from April 1st, 2026. The existing Income Tax Act, 1961 includes 52 Chapters of 823 pages but this new 2025 bill includes 23 chapters, 16 schedules in 622 pages.
Income Tax Bill 2025 – Highlights
| Post Title | New Income Tax Bill 2025 |
| Year | 2025 |
| Country Name | India |
| Name of the Bill | The Income Tax Bill 2025 |
| Bill Status | Approved but effective from 1st April, 2026 |
| Current Bill | Income Tax Act, 1961 |
| Bill Passed On | 13th February, 2025 |
| Objective | Transparent, Modern and Simple Bill |
| Changes In | Tax Year definitions, TDS Provisions consolidation, and more |
| Category | News |
| Official Web Page | www.incometaxindia.gov.in |
Unified ‘Tax Year’ Introduction
The bill introduces a standardised tax year replacing the existing dual system of precious year and assessment year. This change will simplify the tax calculations and align the tax period with the actual earning period. This reduces the confusion and administrative burden. The previous year and assessment year both will be replaced by Tax Year.
IT 2025 Retention of Tax Slabs & Rates
To maintain the continuity and stability, this bill retains the tax slabs and rates announced in Union Budget 2025 – 2026. This approach ensures that taxpayers can plan their finances without adjusting to new rates. Let’s know this New Regime:
| Income Tax Slab | Tax Rate |
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 1.2 Million | 10% |
| Rs. 1,200,001 – Rs. 1.6 Million | 15% |
| Rs. 1,600,001 – Rs. 2 Million | 20% |
| Rs. 2,000,001 – Rs. 2.4 Million | 25% |
| Over Rs. 2.4 Million | 30% |
Simplification of the Tax Codes
The bill reduces the length and complexity of the tax codes. By eliminating the redundant provisions and explanations, this bill makes tax laws more accessible and understandable.
No Tax Return & Income Heads Changes
There are no changes in the tax filing deadlines. The Taxpayers under this bill will now have 4 years to correct errors and omissions. In the Income Tax Act, 1961, only two years are there to correct the errors and omissions. There are no changes in the income tax heads.
Consolidation of TDS Provisions
The 2025 bill consolidates various TDS provisions into a single section and this simplifies the compliance for the taxpayers. Rather than searching for TDS provisions in different sections, now these are available under one section.
Categorised VDAs
The VDAs which are NFTs, cryptocurrencies, and more are now officially included in this bill under the Assets category. This classification of VDAs will now be regarded for taxation purposes. It means that capital gain tax may be imposed on VDAs.
Implementation Timeline
This new bill will be applicable from 1st April, 2026. The timeline provides a period to taxpayers and authorities to adapt to the new framework. This timeline allows us to develop the necessary infrastructure, information, and more. This ensures a smooth implementation.
New Income Tax Bill 2025 Official Link
| The Income Tax Bill, 2025 Download link | Download Here |
FAQ Related To New Income Tax Bill 2025
The Tax Year is a unified 12 month period which replaces the previous and assessment year system. This simplifies the tax calculations and this aligns the tax period with the actual earning period.
No, the bill retains the 2025 – 26 tax slabs and rates.
No, there are no changes made to the income heads under this new 2025 bill.
Yes, the VDAs are now subject to Capital gain tax under this new bill.
The new bill will be applicable from April 1st, 2026.