In the new Income Tax Bill 2025 draft, the term ‘Assessment Year’ will be replaced with ‘Tax Year.’ The Tax Year will be a 12-month period running from April 1 to March 31.

New Income Tax Bill 2025 Draft Released: Key Highlights

The government has released the New Income Tax Bill 2025 Draft, which is expected to be presented in Parliament soon. This bill aims to simplify tax laws and streamline procedures. The government plans to implement the new law starting April 1, 2026.

Direct Use of ‘Tax Year’

In the new bill, the term ‘Assessment Year’ will be replaced with ‘Tax Year’. The tax year will span 12 months from April 1 to March 31. If a new business or profession starts within a financial year, its tax year will begin from the start date and end with the current financial year. This change aims to make tax reporting more transparent and straightforward.

Simplified Legal Language

The bill simplifies legal terminology and shortens the tax code. While the old Income Tax Act had 823 pages, the new bill has been condensed to 622 pages. The number of chapters remains 23, but sections have increased from 298 to 536, and schedules have risen from 14 to 16. Complex explanations and provisions from the previous law have been removed, making it easier for taxpayers to understand.

Strict Regulations on Digital Transactions & Crypto

The bill introduces stricter regulations on Virtual Digital Assets (VDAs), such as cryptocurrency. Now, crypto assets will be classified under undisclosed income, similar to cash, bullion, and jewelry. This step aims to enhance transparency in digital transactions and curb tax evasion.

Introduction of a Taxpayers’ Charter

The bill includes a Taxpayers’ Charter to protect the rights of taxpayers and ensure transparency in tax administration. This charter will clarify the rights and responsibilities of both taxpayers and tax authorities, making tax dispute resolution more efficient.

How Will the Bill Become Law?

The bill has already received Cabinet approval and will now be presented in the Lok Sabha (Lower House of Parliament). It is expected to be referred to a Standing Parliamentary Committee for review and recommendations. After incorporating necessary amendments, the bill will be reintroduced in Parliament for approval. Once passed and signed by the President, it will become law.

Long-Awaited Tax Reforms

The government has been working on tax reforms for several years. A Task Force was formed in 2018, which submitted its report in 2019. Earlier, in 2009, the UPA government had introduced the Direct Tax Code (DTC), but it was never passed in Parliament. The Income Tax Bill 2025 is now seen as a significant step toward making the tax system more efficient, taxpayer-friendly, and transparent.