Income Tax Bill 2025 was introduced in a bid to simplify the tax filing process by reducing provisions and acts. Taxpayers can now compare the sections of the Income Tax Act, 1961 with the corresponding clauses in the simplified I-T Bill, 2025, on the Income Tax department portal.
The Income Tax Department has made available a comprehensive comparison tool on their website, detailing the correlation between sections of the Income Tax Act, 1961 and the corresponding clauses of the new Income Tax Bill.
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In an announcement on February 14, shared on a social media platform, the Income Tax Department revealed that the interactive utility for comparing sections has been made accessible to the public.
Taxpayers can now easily navigate through the sections of the Income Tax Act by selecting from a dropdown menu, which will then present the related clause from the new Income Tax Bill. To enhance user experience, the comparison has also been conveniently presented in a tabular format.
A Section to Section mapping comparing the Income Tax Act, 1961 and the Section numbers in the New Income Tax Bill has been posted on the I-T department's website.
What has changed in the New Income Tax Bill, 2025
A streamlined Income Tax Bill, 2025, was presented in the Lok Sabha on February 13 by Finance Minister Nirmala Sitharaman. This Bill, when passed, will replace the outdated Income Tax Act, which has grown unwieldy with its traditional drafting style and multiple amendments over the past 64 years.
The new bill comprises an impressive reduction in size, with 536 sections and 23 chapters compared to the current legislation's 819 sections and 47 chapters.
Furthermore, the updated Bill includes 57 tables, an increase from the 18 in the existing Act, and incorporates simplified formulae to aid taxpayers in calculating their tax liabilities more easily. The revision also eliminates around 1,200 provisos and 900 explanations that previously added complexity to understanding the law.
The proposed Bill has introduced a novel definition of a 'tax year' as a 12-month period starting from April 1, effectively replacing the current concepts of assessment and previous year. Under the new system, income earned in the previous year (PY), for example, from April 2024 to March 2025, will be assessed in the assessment year (AY) 2025-26.
Subject to vetting by a Select Committee of the Lok Sabha and approval by Parliament, the Bill is expected to be enforced from April 1, 2026.
The updated legislation eliminates obsolete sections, such as those pertaining to Fringe Benefit Tax, streamlining the document by removing 'explanations or provisos' to enhance readability and understanding.